ceilings has concentrated on the distributional (equity) aspects of the measure. In this" paper I would like to discuss the implications of ceilings on agricultural land in a broader context. I will look at both the equity and efficiency aspects of the imposition of land ceilings. Although I am aware of gross simplification, I shall assume that any measures passed by the Government are implemented effectively. It is well known that implementation of land reforms requires efficient administration and legislation that is retroactive. In the next section I will suggest that legislation on land ceilings is analogous to a form of (wealth) taxation and can therefore be studied in that context. This is, apparently, the first time that the subject is being looked at in a public finance context Ceilings and Taxation Agriculture is in a favourable position vis-a-vis industry since it is not subject to any direct taxes. Assume that (a) all land is homogeneous and fanners face competitive conditions so that input and output prices are given, (b) there are non-increasing returns, (c) there is a positive discount rate and (d) there is certainty. Then there would be a one-to-one correspondence between 'permanent income' (the present value of the future stream of income) and the size of the farm. Now assuming no compensation, we can construe ceilings as a tax on permanent income when the tax rate is zero before some critical value and one after it Since most of the existing suggestions include compensation as one of the features it implies that the tax rate after the critical value is greater than zero and less than one if the compensation paid is partial. It is feasible to work out a system of progressive taxation such that the amount of compensation paid decreases at the margin with the excess of the acreage over the ceiling.
