No Taxation Without Rights: Riches of Gilgit-Baltistan 'non-province' being exploited at the discretion of Pakistan

A scene from the days of the Boston Tea party in 1773 was recently replayed in Gilgit, in Pakistan-occupied-Kashmir. At the time of strong resistance against the British, irate demonstrators in Boston had thrown chests of tea into the sea, on the rallying cry of “no taxation without representation”. That call was recently heard in the streets in that "Other Kashmir" during a three-day complete shutter down strike against taxes imposed by faraway Islamabad. The hashtag #notaxationwithoutrights was briefly trending on Twitter, but the issue remained unreported by the rest of the world. Even Srinagar media did not bother to report the event, let alone national dailies.

Demonstrators of 1773 had probably more ability to influence London than today’s Gilgit-Baltistan has over Islamabad. Essentially the area that was earlier called the Northern Areas, exists in a legal black hole. Once part of the Dogra kingdom of Jammu and Kashmir for nearly a century, it had a 16-day independent existence, under the leadership of among others, a certain Major Mirza Hassan Khan who had declared independence in a move that was coordinated with the British head of Gilgit Scouts Major Brown and a Captain Mathieson. That date – 1 November, 1947 – is celebrated as Independence Day.


A request for ‘accession’ was made by this rebel leadership, without any consultations with the people of the area. According to Pakistani sources, the Major had adequate time to regret his decision, and was later part of political activities against the tyranny of the Pakistani state. The practice of deciding the fate of the people over their heads continued when the Karachi Agreement 28 April 1949 was signed that gave the administration of the area to Pakistan rather than the so called government of “Azad Kashmir’. Not a single representative of Gilgit or Baltistan was present to even witness this secret agreement that divided up their state. Suitably enough, the whole area was given no formal name, but were simply called “Northern Areas’ to denote a general direction.

When the Kashmir issue reached the United Nations, Pakistan’s demand for a plebiscite was based on the fact that it held the larger area that included Gilgit and the rest of PoK, which would, therefore, ensure a comfortable win in any such exercise. The request for accession was rejected, and Gilgit-Baltistan remained in a constitutional limbo. Over the years, successive Pakistani governments have doled out limited self governance measures, but which retained the overarching control of what was then called the Ministry of Kashmir Affairs and Northern Areas.

Representational image. Reuters

Representational image. Reuters

Ironically, it was General-President Pervez Musharraf who went the furthest in granting more local government. He vastly expanded the Legal Framework Order to allow greater fiscal responsibility and created the Northern Areas Legislative Assembly, with decision making powers over 61 subjects. The chairman of the Assembly however remained a Pakistani minister. The key was that it also allowed the Assembly to make some changes to the Order, a liberal gesture that was withdrawn by Prime Minister Yousuf Raza Gilani. Another exercise began to provide some “autonomy” to the region.

It was thus only in 2009 that the area finally received a formal name of Gilgit-Baltistan. Discussions on a new administration were held within the Pakistani ministry, and again there was little consultation with the people. In the event, the result was a sham.

The office of a chief minister was created, as also a Governor to give a semblance of likeness to the rest of Pakistan. But there it ended. The powers of the Assembly were diluted by creating a Council wherein nine of fifteen members were Pakistani government representatives. Unsurprisingly the Council usually met in Islamabad. A portent to the future was apparent in division of powers. The Council had far more powers than the Assembly. A reading of the Rules of Business for instance, indicates that all matters relating to Power and Water are under the Council. For instance decisions on granting of power projects to the Chinese under the China-Pakistan Economic Corridor, will primarily be the work of the Council. Minerals are also part of the Council ‘s charter under Entry 41 of Schedule III, as are forests and tourism. Simply put, any exploitation of the riches of the Gilgit Baltistan non-province, are therefore at the discretion of the Pakistani state only.

That, however, does not prevent Pakistan from levying any taxes its chooses in an attempt that is portrayed as bringing Gilgit-Baltistan into the mainstream. The present agitation is against a withholding tax , somewhat like an advance tax, under Section 148 of the Income Tax Ordinance 2001. While the sum has to paid by those who import goods, these importers are not allowed credit at the time of assessment by Gilgit Baltistan Income Tax Authorities since the tax collected is not transferred to the Gilgit-Baltistan Income Tax Authorities by the Pakistan Income Tax Authorities.


That is surreal, considering that legally, the Income Tax Ordinance cannot apply to a territory which is not part of Pakistan. Though Pakistan’s tax regime has been incorporated by the Council and the Legislative Assembly through the Azad Jammu and Kashmir Adaptation of Laws Act, 1959 and the Gilgit-Baltistan Council Income Tax (Adaptation) Act, 2012, it is still an anomaly. It is, therefore, not surprising that market associations, lawyers and businessmen are up in arms, supported by various opposition parties including the Majlis-e-Wahdat-e-Muslimeen, a Shia organisation that operates in mainland Pakistan, to protect the rights of the embattled Shia. Shia’s are majority populations in two of the ten districts, and have significant representation in another three.

The strange position of Gilgit-Baltistan is unique in the world. In sum, it is not part of the territory of Pakistan according to the Pakistani Constitution. It is not even marginally ‘independent’ like the so called “Azad Kashmir”.

It has no representation in Parliament, and therefore is not entitled to funds from the common divisible pool, from which each province is sanctioned finances. Political parties may never take part in activities “prejudicial to the ideology of Pakistan” – which may mean almost anything – and newspapers and magazines virtually don’t exist. There is the ultimate irony. Time after time, the people of Gilgit and Baltistan have demanded union with Pakistan as a province.

This has been rejected by the rump Azad Kashmir on the grounds that it is part of the State of Jammu and Kashmir, and would therefore militate against the final goal of self-determination. There is another interesting position from ‘Azad Kashmir” leaders, where they insist that any change in the position of Gilgit Baltistan, should be decided by Muzaffarabad, and not Pakistan. Which brings everything back to square one. Tired of the whole squabble, the people of the area have called for merger with India, or at least a road through Kargil into India that would prevent them from being marooned, when the Karakorum highway is closed, as it often is. That demand is seen as treacherous, and many locals have “disappeared” thereafter. Into this mess, came China with its offer of an Economic Corridor and all that comes with it. But everytime a power project is awarded, or a road is built, the fundamental question that arises is, who’s land is it? Closely followed by the question, should taxes be paid to. For Chinese banks, that could be a nightmarish legal tangle.


Published Date: Nov 17, 2017 02:06 pm | Updated Date: Nov 17, 2017 02:06 pm



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