Property Taxes and State Incapacity in Pakistan

Muhammad Mujtaba Piracha, Ambassador, World Trade Organisation

Dr Muhammad Mujtaba Piracha is Pakistan's Ambassador to the World Trade Organisation in Geneva since 2019, where he is currently the Chair of the Committee on Trade and Development. He is a graduate of the London School of Economics and Political Science and undertook his doctoral studies at the
Institute of Development Studies at Sussex. Dr Piracha has worked across Pakistan in both the government and non-government sectors. Some of his previous assignments include Additional Chief Secretary (Services), Commissioner Lahore, Secretary Industries, Commerce, Investment and Skills Development
in Punjab; Program Economist at the Aga Khan Rural Support Program; and multiple held assignments in Balochistan.

List of Figures and Tables
Abbreviations
Preface
1. Why is Property Tax in the Punjab so Low?
- The Pakistani State is Not a Good Taxer
- Property Taxes are Good Taxes but Hard to Collect
- Investigating the Puzzle
- Findings and Chapter Outlines
2. A Cooperation Problem: Property Tax and Inter-governmental Politics
- Why Money Incentives are Not Enough
- Bureaucratic Interests Impede Property Tax Collection
- Inter-governmental Politics and Property Tax Collection
- Conclusion
3. Low Fiscal Equilibrium: Income and Liquidity of Subnational Governments
- From Where do Subnational Governments get Their Money?
- Do Intergovernmental Transfers Discourage Tax Collection?
- Effects of Subnational Government Sources of Income on Their Own Tax Effort
- Do Subnational Governments even need the Extra Money?
- Conclusion
4. Low Fiscal Equilibrium: Lack of Political Incentives to Spend on Public Services
- Why is Public Service Delivery so Bad?
- Service Delivery to the Poor is a Low Priority for the Government
- Civil Servants are Happy with their Perks and Privileges
- Donors Do Not Want to Upset the Apple Cart
- Conclusion
5. The Informality of Formal Tax Collection
- Property Tax Administration in the Punjab
- Tax Collection at the Local Level
- An Office Meeting, Target-setting, and Managing Information
- Conclusion
6. Enforcement: The Mirage of Change
- Enforcement in the Last Quarter
- How Supervisors Ensure Enforcement
- Civil Courts Impede Enforcement
- Persistent Informality
- Dealing with Various Types of Tax Defaulters
- Conclusion
7. So, What Can Be Done?
- First, a Summary of the Arguments
- Do Incentives to Tax Collectors Really Work?
- Can Information Technology Help Increase Tax Collection?
- Policy Implications for Tax Reforms in Pakistan
- Some Broader Implications
Notes
Bibliography
Acknowledgements
Index