AGRICULTURE TAX MANDATORY FOR ACCELERATING ECONOMIC GROWTH

MOHAMMED ARIFEEN
Jan 05 - 18, 2009

In the present economic meltdown tax on agriculture has become extremely necessary for generating excessive revenues. Historically, in Pakistan agriculture tax is generated only through land revenue system. This practice of agriculture tax did not show any positive result in mobilizing the substantial revenues for the growth in the economy. The World Bank and IMF have been pressurizing the governments to impose direct tax on agriculture for the overall enhancement of the economy.

Unfortunately, the government was ignoring the pressure and is still going on with the old system of provincial government of collecting tax through land revenue system. There was hope that General Musharraf's government would whole heartedly impose direct tax on agriculture. But he was not successful because of the stiff resistance from the powerful feudal lords, civil military bureaucrats and agriculture technocrats.

The case of agriculture tax in Pakistan is strong in view of the fact that agriculture tax through land revenue system has become obsolete, regressive, price and income elastic. So, in this context, there is no remedy and the present land revenue system of agriculture tax has to be removed forthwith. Agriculture tax has become inevitable for rapid economic development such as poverty alleviation, use of land resources more intensively and efficiently. Also, it has become necessary. Our influential industrialists and business houses are trading their earned income under the agriculture source of tax for avoiding taxes.

Further, imposition of agriculture tax would compel the powerful agriculturist lobbies to use their land efficiently and increase the production level. Also, mass uneconomical and showy consumption in large cities would be restricted by them and will ensure stability of prices of most of the consumption goods.

The issue of agriculture tax is not complicated as it is believed in some circles but it is extremely desirable for the good of the economy that all persons whether agriculturalist or non agriculturalist be taxed rationally and equitably. A certain criteria may be specified for exemption of agriculture tax on persons living on subsistence level. Just as in other sectors where certain categories of persons are exempted from tax so may be the case in agriculture sector.

Therefore, above certain level agriculture tax should be imposed and below that certain level there has to be exemption of tax. The forceful argument usually put up by powerful agriculturalist lords is that high cost of inputs has made it difficult for them to increase agriculture productivity. This argument does not hold true as indirect taxes have already made it difficult and cumbersome for all types of people engaged in other sectors of the economy and not especially in agriculture sector.

However, this argument might be convincing only in the case of farmers who are living on subsistence level and who actually, after the introduction of new agriculture tax, will not come under the purview of agriculture tax net. Therefore, in this context tax on agriculture income should be rational and equitable.

This is not the first time the Punjab Assembly has opposed tooth and nail tax on agriculture but a stiff resistance was shown in 1990s also. The real reason for their dislike is that government is still dominated by agriculturalist, feudalists, lords upon whom this tax will fall. They always argued that agriculture had been heavily taxed through direct and presumptive taxes in the past and extensive resources were transferred to other sectors of the economy.

A number of tax-immune agrarian elitists spend their incomes lavishly on living in luxurious houses and palatial buildings, whereas, if taxes are imposed on genuine rich agriculturists the income derived from them will be spent on for the welfare of the poor farmers.

All must pay their taxes for the high growth of the economy of Pakistan. The feudal lords should not be treated as privileged class out of tax net. In most of the countries all with their ability and means pay their taxes honestly and sincerely. Pakistan should follow example of these countries. The government should make honest endeavor to tax agriculturists therefore.