“Clear and Hidden Taxation in Agriculture: A News Analysis” | (कृषि का स्पष्ट और अंतर्निहित कराधान – समाचार पत्र )

Main Points In Hindi (मुख्य बातें – हिंदी में)

यहां दिए गए लेख के मुख्य बिंदुओं का सारांश है:

1. कृषि आयकर में वृद्धि: पंजाब विधानसभा ने अपने कृषि आयकर (एआईटी) कानून में संशोधन किया है, जिसमें कृषि व्यवसायों पर संघीय आयकर दरों के समान अधिकतम कर दर बढ़ाकर 15% से 45% तक किया गया है। यह बदलाव अंतर्राष्ट्रीय मुद्रा कोष (आईएमएफ) की शर्तों के मद्देनजर किया गया है।

2. किसानों पर वित्तीय दबाव: एआईटी के आलोचकों का कहना है कि किसानों को पहले से ही भारी अंतर्निहित करों का सामना करना पड़ रहा है, जो शहरी उपभोक्ताओं और औद्योगिक क्षेत्रों के प्रभावी सरकारी नीतियों के कारण उत्पन्न होता है। इससे किसानों की आय में कमी आई है और यह अंतर्निहित कराधान उनकी स्थिति को और खराब करता है।

3. नवीनतम मूल्य नियंत्रण अधिनियम: पंजाब सरकार ने "पंजाब आवश्यक वस्तु मूल्य नियंत्रण अधिनियम 2024" लागू किया है, जिसके अंतर्गत कृषि इनपुट और आउटपुट की कीमतों पर सख्त नियंत्रण किया गया है। यह उपाय किसानों की उत्पादन लागत और बाजार दरों के नीचे गेहूं की कीमतें निर्धारित करने के लिए किया गया है, जिससे किसानों को वित्तीय नुकसान हुआ है।

4. सब्सिडी और उनका प्रभाव: सरकार द्वारा कृषि क्षेत्र में सब्सिडी देने का प्रयास किया गया है, हालांकि नकद सब्सिडी और अन्य सहायता कार्यक्रमों का लाभ किसानों को सीमित रूप से मिला है। पिछले वर्षों में ऊर्जा दरें बढ़ने और उर्वरक की कीमतों में वृद्धि ने किसानों की आर्थिक स्थिति को और भी कमजोर किया है।

5. न्यायपूर्ण कराधान की आवश्यकता: निष्कर्ष में, लेख यह सुझाव देता है कि अगर सरकार समान कराधान की दिशा में प्रगति करना चाहती है, तो उसे सभी अंतर्निहित करों और सरकारी प्रतिबंधों को समाप्त करने की आवश्यकता होगी। साथ ही, उसे उपभोक्ताओं के लिए सब्सिडी प्रदान करते हुए कृषि बाजारों को विकृतियों से मुक्त रखने पर ध्यान केंद्रित करना चाहिए।

Main Points In English(मुख्य बातें – अंग्रेज़ी में)

Here are the main points about the recent changes in Punjab’s Agricultural Income Tax (AIT) law and the broader implications for the agriculture sector in Pakistan:

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1. Increase in Agricultural Income Tax Rates: The Punjab Assembly has amended the AIT law to align maximum tax rates for individuals and businesses with federal income tax rates, potentially raising them from 15% to up to 45% in response to conditions linked to the International Monetary Fund (IMF) program.

2. Criticism of Historical Taxation Practices: Critics argue that farmers already bear a heavy tax burden, including various direct and indirect taxes, as government policies favor urban consumers and the industrial sector. This historical perspective is often overlooked when advocating for higher AIT rates.

3. Government Control and Impact on Prices: The government’s long-term policies have led to price controls on key crops, with recent legislation setting wheat prices below production costs. This has resulted in significant economic losses for farmers while benefiting urban consumers and altering the distribution of wealth within the economy.

4. Challenges with Subsidies and Market Access: Existing agricultural subsidies have been inadequate, with farmers facing rising costs for inputs like electricity and fertilizers. Restrictions on the movement of agricultural goods prevent them from accessing better prices in other regions, further squeezing their margins.

5. Need for Market Reforms: The article argues for the removal of inherent taxes and market distortions to achieve horizontal equity in taxation, meaning individuals with similar incomes should pay similar taxes. It suggests that the government should focus on ensuring functioning agricultural markets and providing consumer subsidies rather than perpetuating inequities in the agriculture sector.

Complete News In Hindi(पूरी खबर – हिंदी में)

Complete News In English(पूरी खबर – अंग्रेज़ी में)

Last month, the Punjab Assembly took steps to amend its Agricultural Income Tax (AIT) law, increasing the maximum tax rate for individuals and businesses to 15%, aligning it with federal rates that can go up to 45%. Other provinces are also considering similar changes in response to conditions tied to the ongoing International Monetary Fund (IMF) program.

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However, critics of AIT argue that farmers have historically paid not only clear taxes (both direct and indirect) but also substantial hidden taxes, mostly due to government policies favoring urban consumers and the industrial sector, leading to a loss of income for farmers. The hidden taxation, which appears in various forms, is often overlooked by those strongly advocating for comparable AIT.

In Pakistan, hidden taxation primarily arises from governmental control over prices of major crops like wheat, cotton, sugarcane, and rice. Recently, the Punjab government implemented the Punjab Essential Commodities Price Control Act 2024, greatly expanding its authority over the pricing, movement, and distribution of agricultural inputs and outputs.

For instance, in July 2024, the Punjab government limited district-specific wheat prices to between 2,800 and 3,050 rupees for 40 kilograms, which is significantly lower than farmers’ production costs and current market rates. This measure aimed to lower "bread" prices in urban areas but effectively shifted hundreds of billions of rupees from the agricultural sector to other areas of the economy—an example of hidden taxation.

Justifying higher AIT by citing the 1.12% of large landowners controlling 22% of Pakistan’s land risks overburdening the agricultural sector.

Additionally, in April 2022, despite international wheat prices being $480 per metric ton, the government set the support price at just 2,200 rupees for 40 kilograms, resulting in a hefty withdrawal of 1.3 trillion rupees from farmers over a year.

While there have been years where farmers received higher support prices than international rates, a 50-year analysis shows that, contrary to popular belief, farmers generally received lower rates overall. Conversely, the government has succeeded in ensuring national food security and stabilizing wheat prices for consumers, often at farmers’ expense.

The textile sector, a major contributor to Pakistan’s exports, exemplifies how its success has hinged on hidden taxation, with farmers historically selling cotton at lower prices than global rates.

Another form of hidden taxation involves restrictions on the inter-district and inter-provincial movement of wheat and other crops, hindering farmers from getting better prices in other regions. There are also occasional export bans on agricultural products to manage prices domestically, further denying farmers access to higher international returns.

When district administrations set prices for milk, mutton, and beef without considering farmers’ production costs, this carries significant financial risks for the agricultural community. Officials frequently visit fruit and vegetable markets to pressure wholesalers into lowering prices, disregarding the losses that farmers face during market gluts.

Unlike many other countries, Pakistan has provided support to agriculture mainly through lower electricity rates and tax concessions. However, direct cash subsidies or material support have been largely insignificant. Many of these subsidies have been fully or partly withdrawn in recent years, with electricity rates for agricultural tube wells increasing nearly fourfold compared to industrial tariffs.

Despite the government providing gas to fertilizer manufacturing plants at reduced rates, this benefit has not fully reached farmers, evidenced by higher prices they face due to exploitation by the fertilizer mafia.

The Punjab government currently subsidizes 9,000 tractors and 2,500 solar tube wells, but promoting established technologies for a limited group raises questions about their impact on broader agricultural development. Additionally, farmer cards providing interest-free loans serve less than 10% of farmers.

In short, the hidden taxation burdens farmers far more than the benefits of any subsidies, fundamentally distinguishing their tax situation from that of individuals and businesses.

The potential of AIT appears exaggerated. Only 1.12% of large landowners (according to the 2010 Agricultural Census) control 22% of the land, much of which is barren. Using this small group to justify high AIT could hinder investment and development, particularly since the government lacks a clear plan for the region’s growth.

In conclusion, under the IMF’s conditions, the government is gradually reducing its control and plans to end support and symbolic pricing for major crops. If the government aims for horizontal equity in taxation—where people with similar incomes pay the same tax—it needs to eliminate all hidden taxes and restrictions, often justified in the name of national food security and controlling food inflation.

In doing so, the government should focus on ensuring well-functioning agricultural markets free of distortions, while also providing consumer subsidies to reduce the burden on the public.

Khalid Watto is a farmer and development professional; Dr. Waqas Ahmed is a former Associate Professor at the Agricultural University, Faisalabad.

Published in Dawn, the Business and Finance Weekly, December 9, 2024.

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