THE Punjab Assembly took lead on Thursday in adopting a bill to levy an equitable agricultural income tax. Under the Punjab Agricultural Income Tax (Amendment) Bill 2024 high-income farmers will be subject to a super tax and the income tax exemption on agricultural land will be removed. Income from livestock will also be taxed and considered part of agricultural tax.
The PPP, a coalition partner of PML(N) and the main opposition party the PTI opposed the legislation claiming it would further burden farmers who were already selling their wheat at a loss and facing high costs for fertilizers, pesticides and electricity. The farming community definitely needs incentives to grow more but the objective should be realized by lowering the cost of inputs and not continuing with decades long exemption from the agricultural income. If a clerk with nominal income is paying tax and the Government has devised a plan to tax small traders as well, then there is absolutely no justification that feudal should remain out of the ambit of the income tax. It is widely believed that a majority of landlords misused the exemption to conceal their other income, depriving the exchequer of billions. There is a threshold for levy of income tax and whosoever’s income (from any source) crosses that benchmark must pay the due tax. The logic that the agriculture sector is already indirectly taxed has no sound basis for exemption from income tax as other sectors and even individuals are paying indirect taxes and are also paying their due income tax. Pakistan’s Tax-to-GDP ratio is one of the lowest in the world and the Government is exploring all avenues to expand the tax net to increase dependence on domestic resources instead of spreading begging bowl before bilateral and multilateral donors. According to the World Bank, Pakistan could collect over Rs1 trillion in additional tax revenue if it fully realized the potential of its agricultural sector. However, realization of this potential is a Herculean task in view of lack of documentation of the agricultural economy and its vast geographical spread. There are no fuller details available as to the mode of taxation – whether it would be on the basis of land holdings or actual income, which could be difficult to determine because of the enormity of the scale and the resources/manpower required collecting the required data. Punjab has an edge as far as digitization of land record is concerned and modern technologies like satellite imaginaries can be used for proper assessment. Experts say machine-learning can help the government and farmers interpret this satellite imagery in depth and even assess the yield potential of various crops at the time of harvesting if the systems used to analyze the imagery are properly trained in this task. The revenue collection from the agricultural sector should be modernized in coordination with the international companies of repute to ensure transparency and fairness. It is also apprehended that like industry and trade, which are resisting efforts aimed at documentation of the economy, similar opposition might be there by the farming community but progress can still be made through concerted efforts and determination. All this means the passage of the bill by the Punjab Assembly is a humble beginning towards realization of optimum potential of income tax from the agriculture sector and a lot more will have to be done to make the initiative genuinely fruitful for the economy. If the opposition of the bill in the Punjab Assembly by the PPP and the PTI was based on principles and party policies then it is feared that the Sindh and the KP Governments might not follow the suit, which will create understandable resentment by farmers in Punjab. There are also reports that the PPP Governor in Punjab might return the bill to the Assembly but it will become a law automatically if passed again by the house. The tendency of opposing fair moves for the sake of political expediency is regrettable and the parties must review their strategies when it comes to national interests.
