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Monday, 18 July 2011

Discuss the benefits and costs of agriculture tax or Why the agriculture tax should be imposed ?

Tax on Agriculture :-
It is very old issue in Pakistan. A number of commissions were set up in the past to decide this problem. In 1963, in 1972 and in 1990 this matter was taken very seriously.
A common man simply says that when govt. of Pakistan is imposing taxes on all the areas even a govt. servant who's receiving more than six thousands per month is paying tax, so why the agricultural income is exempted from tax. The budget deficit of Pakistan is increasing day by day. This deficit can be reduced by imposing tax on agricultural income.
Following are the main arguments in favor and against the agriculture tax :


FAVORABLE ARGUMENTS

1. Canon of Equality :-
The traders, producers, industrialist, servants are paying taxes. So why not the agriculturist. There are big land lords in the country. So they should also contribute their share to the state.

2. Subsidies to the Farmers :-
Govt. provides subsidies on inputs, like fertilizers and electricity. Govt. also provides them loans on low rate of interest. The burden of taxes is small as compared to concessions. So farmer must pay the tax on his income.

3. Increasing in the Value of Land :-
As the infrastructure facilities like roads, electricity, and education is increasing the value of land property is also increasing. Govt. is spending a huge amount on these facilities, so it should receive the agriculture tax.

4. Greater Share in GDP :-
The agriculture share in GDP is 26% while its contribution to total tax collection is 4% so there is logic to impose the tax on agricultural income.

5. Low Rate of Savings :-
According the contribution in GDP of this sector its savings are low. This sector is spending the money very lavishly. So another way is that compulsory savings should be received from this sector.

6. Income Tax is Elastic :-
Income tax on agriculture is more elastic than land revenue. As the out put per acre is increasing due to better inputs revenue of the Govt. should also increase.


ARGUMENTS AGAINST AGRICULTURAL TAX

1. Large Number of Taxes :-
Farmer says that there are large number of direct, indirect and hidden taxes on this sector. Ushar, land revenue and patwari tax is already available, so there is no justification of this tax.

2. No Proper Return :-
Agriculturist says that various Govt. export corporations and middleman purchases this is product at low price and he is not getting the proper reward of his product. So why he should also pay the such tax.

3. Unfavorable Weather :-
Some people say that there is no uniformity of income in this sector. It varies from year to year. If nature is kind and weather is favorable then income is better otherwise not. So agriculture tax may no be imposed.

4. Case of Subsidies Benefit :-
Farmer argues that he is not receiving the benefits of subsidies due to the black marketing of the dealers and agents. Due to the poor marketing system a middle man is looting them from both hands. So there is no justification of such tax.

5. Transfer of Tax :-
Some people say that such tax will be shifted from landlord to tenant and consumer. tenant is already living below the subsistence level.

6. Big Landlords Will Escape :-
Technically big lords have very small holdings in their account. Because in the books they have transferred lands to save themselves. So they will escape from the tax net and there will be small collection of revenue.

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