May 19, 2008	Monday	Jamadi-ul-Awwal 13, 1429

THE ministry of agriculture is conducting a survey of the incomes of big and small farmers. This is not for the first time that such an exercise has been held, but not much has come out of it.

But without such an undertaking the income of farmers and those dependent on farming cannot be determined. Such efforts proved futile in the past following constitutional objection that agriculture is a provincial subject and the federal government can neither fix farmers’ income nor impose tax on them. The objection is valid as agriculture is a provincial subject and the centre cannot indulge in taxing agricultural incomes.

But the stronger objection to the move comes from the feudal lords who own much of the land. They do not want their income assessed and are opposed to be taxed by the federal government. Following the exorbitant rise in oil and food prices, the government faces a severe financial crisis. The government is to import 2.5 million tons of wheat and four million bales of cotton and needs its cash position to be improved rapidly and effectively.

The Federal Board of Revenue has, therefore, been toying with the idea of raising revenues through agricultural taxation from time and again. But the issue of agriculture being a provincial subject comes to the fore. By now, all are agreed on the provinces dealing with agricultural taxation.

The provincial tax revenues are very low at one per cent of the GDP while the ideal is supposed to ten per cent. That is why the provinces rely on federal divisible pool and subvention.

While the feudal lords claim irrigation, power and other facilities, they are not ready to pay adequate taxes. Sindh and Punjab collect too nominal a tax from farm incomes hardly enough to meet the growing expenditure. Making the feudal lords pay their share of the taxes is not an easy task. But it has to be done for raising money for investment for modernising agriculture.

The expectation that federalisation of agricultural tax will usher in large revenue may not materialise.

In the 1970s, agricultural crop insurance was proposed but that was linked to agricultural income tax. Crop insurance is part of modern farming. The feudal lords mechanising their farms and using tractors and harvesters should be ready to pay proper income tax and insure their crops. That will bring in larger investment in the agriculture and help it develop. We cannot go on with low yield in agriculture and big imports at a price prices.

We have to develop mechanised farming and modern dairy industry if we want our agro industry to grow, our people to eat better and our economy to become stronger. We have to develop an agricultural system which should include rational subsidies to the under-developed areas of agriculture.

The feudal lords should ask their sons who have been educated abroad, to go to the fields and devote their energies towards developing agriculture. When the farming is properly developed, foreign investment would itself start coming in plenty.

The poor and landless farmers should become a thing of the past and resources from the agricultural income tax should be invested in agricultural development.