Ahmed Khan Malik

The government has been asked to bring the agriculture sector into the tax net to lessen the burden of high taxation on the manufacturing sector and the salaried class. 

Industrialists have argued that the agriculture sector, despite making a significant contribution to the national economic growth, is largely out of the tax net.  Farazur Rehman, Patron-in-Chief of Pakistan Business Group, while commenting on the recent revelations by Federal Board of Revenue regarding large-scale tax evasion, said that the government should not only act against tax evasion in the industrial sector but also ensure transparency by including the agricultural sector in the tax system.

Speaking to WealthPK, he added that taxing the agricultural sector would improve transparency, benefiting not only farmers but also providing consumers with goods at more affordable prices. He appreciated the recent FBR campaign targeting tax evasion in various sectors, and stressed the need for further measures to strengthen the national economy.  “Agriculture accounts for about one-fifth of Pakistan’s $350 billion economy. If the sector was contributing its fair share, a fifth of the current year’s tax collection target of Rs9,415 billion would be coming from farm output. However, actual collection is a tiny fraction,” he pointed out.  Rehman said that the government’s efforts to bring the sector under the tax net have not yielded the desired results so far. 

Masood Pervez, Secretary General of Sindh Small Industries Association, said that the government was not interested in giving incentives to industrialists and exporters, rather it was increasing the tax burden on them. He said that it was impossible to run any industry amid increasing production costs, shortage of dollars and very expensive loans. He regretted that the government was doling out incentives for the agricultural sector despite the challenging economic environment. Speaking to WealthPK, Pervez said that if the concessions given to the agricultural sector were made available to the industrial sector, exports would be increased, and rapid industrialisation would take place in the country, boosting the government’s revenue.

He said that the government had no policy for the industry; however, benefits are available for the agricultural sector, especially for landlords, making them richer and their farmers poorer by the day. He said that the government should take tough decisions in the current economic situation and tax those who get unaccounted profits from the agriculture sector. “Otherwise, putting the entire tax burden only on a certain section will bring the economy to the brink of collapse.” Pervez pointed out that the IMF had also demanded the government tax the agriculture income.  He said that the step would broaden the country’s tax net and increase the number of filers, while also reducing tax evasion as only Rs3 billion tax is collected from the agriculture sector annually.

Credit: INP-WealthPk