Book Review: Property Taxes and State Incapacity in Pakistan by Muhammad Mujtaba Piracha

Piracaha tries to provide answers to some of the most serious questions regarding taxation in Punjab, the most populated province of Pakistan. The author discusses the reasons behind the low property tax in Punjab, inter-governmental politics, low fiscal equilibrium, public service delivery, formal tax collection, questions of enforcement and what can be done to improve the tax collection. In the preface of the book Pircaha writes about the 'fiscal contract' between the citizens and the state. In the state the people are sure that their lives and property are secure and that they are getting services in return for their money (taxes).

In Punjab alone, the government collects about 1 billion in agriculture income tax, where the potential is between 50-70 billion (p.7). Some experts say that the aid flow to Pakistan helped the government put off the required tax reforms and avoid the political costs of taxation (p. 7). Piracha is inspired by Robert Wade (1982), whose work is used as an approach to study the irrigation department in India.

The author says that Punjab has historically neglected raising its own source revenues (p. 19). One perspective is that the provincial government of Punjab does not commit adequate resources to digitalize property tax (p. 38). Further in the book the author discusses responsibilities of junior officer, channeling of taxes, district civil service cadre, global level institutional arrangements, initiation of NFC in 1951, government's financial accounting system, local banks, failure in the delivery of public services

Piracha is of the view that the rich including the industrialists show large chunks of their income as agricultural (p. 85). An oft-quoted quip in the civil service is that 'it is easier to fire the Prime Minister of Pakistan, than a peon in a government office' (p. 102). Other themes discussed in the book are bribes and hiring in Punjab, increase in reviews and monitoring missions by donors, ET and NCD hierarchy of Punjab, corruption, patronage, and the civil service.

The lower staff usually feels threatened by digitalization (p. 121). The constable usually introduces himself as 'tax officer' (p. 120). Piracha also writes about the difficulty in collecting full payments, different types of taxes based on location, examples from an established family of Lahore, lacking in the tax assessment, tax administration reform and corruption amongst the civil servants. The last line of the book says that 'a nation's real strength lies in socio-economic progress and the happiness of its people' (p. 185).