Crisis in agriculture
AGRICULTURE is in complete disarray at the moment. Officials tell us that the farmers’ fixation with the minimum support price for their crops and their resistance to moving towards a market economy and adopting modern farming practices is holding back our agricultural sector. Farmers claim that the soaring costs of farm inputs and energy, inefficient markets and short-sighted official policies have made farming largely unprofitable in recent years and are the primary cause of the deep mess in the food sector. Environmentalists say food production is declining because of increasing water shortages, climate change, deforestation, soil erosion and natural calamities. At stake is the nation’s food security as well as the livelihood of hundreds of thousands of people. The critical importance of agriculture — which contributes just under 24 per cent to the national GDP and employs over 45 per cent of the country’s total employed labour — cannot be overstated in a developing economy like Pakistan. It grows food for over 160 million people and raw materials for textiles, the country’s largest export-oriented industry. Besides, it provides a large market for domestic industrial goods and products.
Based on chemical fertilisers and pesticides, the so-called Green Revolution which began in the mid-1960s ushered Pakistan into a new era as it became a net food exporter from being a net importer. It also paved the way for the establishment of one of the world’s largest textile industries that accounts for over 60 per cent of the nation’s export revenues and employs more than 40 per cent of industrial labour. Four decades down the road, the Green Revolution is losing steam. Distorted markets and low use of new farming techniques and technology — whether due to poverty or resistance to change — are not helping either.
Any major downturn in agriculture could tip our fragile economy, pushing a large portion of the rural and urban population into abject poverty and starvation. The looming threat to our food security might not appear real to many at the moment. But the ballooning import bill to meet wheat and other food shortages and the rising prices that have already put food outside the reach of the poor point in that direction. In order to boost production and hold down food prices in the short run, the government needs to subsidise diammonium phosphate (DAP) as its use has dropped substantially due to a 300 per cent price hike in just one year. In the medium to long run, it has to help farmers in learning to make efficient use of expensive fertilisers and scarce water resources as well as encourage modern farm technology and promote organic farming for regeneration of tired soil.
An unimplemented agenda
PAKISTAN’S water scenario has never looked grimmer. With an annual population increase of more than two per cent, there is intense pressure on the country’s water resources. Most areas experience low and irregular rainfall, groundwater is being overused, rivers are drying up, glaciers are melting and, as this paper reported the other day, the storage capacity of dams including Tarbela and Mangla has been significantly reduced. Unfortunately, we must rely on the natural resources we have, because the creation of new ones is impossible. The challenge is then to generate more water from whatever limited resources we possess. This appears a gargantuan task, especially in the light of World Bank findings in 2005 that “it is projected that over 30 per cent more water will be needed over the next 20 years to meet increased agricultural, domestic and industrial demands” in Pakistan.
Given the extent of wastage of water, only a collective effort to address the country’s chronic water shortage can provide some respite. Yes, we do need big dams, viable in design and politically non-controversial, to store this scarce commodity and cut down on our water losses. But it is equally essential to implement a water conservation strategy that is simple enough to be followed by the common man. After all, people must be made aware that it is their future that is at stake and that without conservation efforts on their part, the horrendous consequences of water scarcity cannot be staved off in the years ahead.
Unfortunately, the importance of water conservation has not yet been realised. It is not a topic that is considered serious enough to be discussed in schools or neighbourhoods, and a community spirit is sorely lacking in this regard. Of course, one can blame the government for a defective water supply network that loses a large quantum of water through faulty pipes. As individuals, we waste water every day. Defective taps continue to drip for weeks if not months and end up wasting several litres of water a day — a quantity that could be used to wash up dirty dishes in the kitchen. In every other way, too, such as washing clothes or watering plants, we are far from economical in the use of water. Meanwhile, in areas under agriculture, canal leakages and certain irrigation practices also contribute to water loss — according to some studies, as much as 50 per cent goes to waste. Educating the public on ways to recycle and reduce the consumption of water may not be the final solution in itself. But it is certainly an integral part of it.
Firefighting in Islamabad
A LONG overdue modernisation of Islamabad’s obsolete firefighting services finally materialised last week with the passing-out parade of the first batch of professionally trained fire and rescue personnel. With this 200-plus staff, and the induction of a fleet of new firefighting vehicles and ambulances coupled with the establishment of a Disaster Training Academy, the revamped Fire and Rescue Department is supposed to do Islamabad proud in the event of the next disaster. Given the fact its predecessor had failed to respond effectively to several major disasters in the past including the collapse of Margalla Towers during the 2005 earthquake, the fire that gutted almost the entire multi-storey Shaheed-i-Millat Secretariat in 2002 and the fire that destroyed the Assembly Hall of the Parliament Building in 1993, improvement in the city’s fire services was badly needed. But for this new Fire and Rescue Department to remain relevant to Islamabad’s needs for years to come and not be rendered obsolete like the old fire department, regular and continual improvement in staff training, equipment and maintenance is mandatory. For the new department to be efficient in the expanding city, well-dispersed new fire stations are also a necessity.
While it is important to strengthen the ability to fight fires, equally crucial is the need to encourage the prevention of fires through fire-safe buildings. This is the chief lesson from both the fires at the Shaheed-i-Millat Secretariat and the Assembly Hall, which fortunately did not cause any deaths because the fires occurred at a time when the buildings were unoccupied. Although it has been reported that the city authorities have recently started inspection of buildings to review their fire-safety systems, a major cause of concern is that most of the structures in Islamabad, like many buildings in other cities of Pakistan, are not built according to recognised fire-prevention guidelines and lack firefighting systems like smoke detectors, automatic fire alarms, fire-extinguishing and smoke-extraction systems, fire escapes, etc. Also important in fire prevention is public awareness, through fire-evacuation plans and occasional fire drills, especially in schools and offices.
Enigma of agricultural income tax
WHEN taxes are the subject of discussion, the most vociferously argued is farm tax or, more accurately, tax on agricultural income. Academicians, economists and the media are surprisingly ill-informed about this issue.
The general misconception is that income from agriculture has been exempted from tax by law. Hence the demand popularly voiced from time to time for a tax to be imposed on agricultural income.
But this perception is incorrect, as agricultural income has never been an exempt head. Indeed, the confusion can be attributed to the Government of India Act 1935 that remained the law of the land in Pakistan, as provided by the Indian Independence Act 1947, until the first constitution was adopted in 1956. Under the Government of India Act 1935, agricultural income was designated as a provincial subject and it remains so to date. In the Constitution of 1973, item 47 of the federal legislative list in the fourth schedule speaks of “taxes on income other than agricultural income”.
Hence the National Assembly cannot legislate to tax agricultural income unless it amends the Constitution. If a subject is not listed in the federal and concurrent legislative lists, it falls in the provincial domain. If parliament cannot tax agricultural income, it cannot declare it exempt either.
Hence it was the responsibility of the provinces to legislate on this subject and implement the law. This was not done and as the constitutional implications of the matter were not understood the debates were confused and produced no results. Nonetheless, public debate on the issue led to the constitution of many bodies including three famous ones — the National Taxation Reform Commission (1986), National Commission of Agriculture (1988) and Committee of Experts on Taxation of Agricultural Incomes (1989) — to address the issue. None of them could formulate a clear position on this vital issue in our national economy. Ultimately, however, and probably in the wake of pressure from the IMF, our main aid-giver at the time, provincial laws to tax agricultural income were enacted in 2000.
Specific rules to implement the law were formulated by relevant agencies but the law is still to be implemented. This is proving to be a formidable and uphill task. The law provides a broad framework but to implement it more specific information is needed. For instance, the law provides a clear definition of agricultural income and the procedure to calculate taxable income, tax liability and claim of credits for ushr, water rates and mark-up on loans. But without proper statistics and a digitised cadastral survey of the land in question, it is virtually impossible for the tax collector to determine the number and size of farms in a potential taxpayer’s possession and calculate the amount of produce to be taxed.
What actually comprises agricultural income? Agricultural production as per the Economic Survey of Pakistan has two aspects. One is crop agriculture and the other relates to livestock. But income from crop agriculture is conventionally perceived to constitute agricultural income although this is only one component.
In 2006-07, total farm commodity production stood at 20.9 per cent of GDP. Crop agriculture’s share in the mix was only ten per cent whereas livestock contributed 10.4 per cent and the remaining negligible share came from fishing and forestry (0.3 per cent and 0.2 per cent respectively).
The 2006-07 Economic Survey defines livestock as follows: “Livestock is an important component of Pakistan’s population since 30-35 million rural population is involved in livestock raising. Average household holdings are 2-3 cattle/buffalo, 3-4 sheep/goats and 10-12 poultry per family which contribute 35 to 40 per cent to their income”.
Since the Economic Survey is silent about dairy and related farm production, one can well imagine from the above information how scant will be the taxes yielded by the livestock sector. Much of the milk produced is being consumed by households themselves as part of their regular diet. With most households living at subsistence level and their incomes from the sale of milk barely exceeding the minimum exemption level for tax purposes, there can hardly be an improvement in total tax collection under this head.
As regards crop agriculture, total available farm area is around 50.4 million acres and the total number of private farms stands at 6.6 million, of which 95 per are under 25 acres. Sixty-three per cent of the farm area comprises farms less than 25 acres in size. Obviously, the individual owners of these farms would not be able to contribute much in terms of tax revenue.
The break-up of the remaining farms and areas is as follows: 16 per cent of the area and four per cent of the number of farms have sizes ranging between 25 to 50 acres; ten per cent of the area and one per cent of the farms have sizes between 50 to 100 acres; three per cent of the area and less than 0.5 per cent of the number of farms have sizes between 100 to 150 acres; and eight per cent of the area and less than 0.5 per cent of the number of farms have a size above 150 acres (www.statpak.gov.pk).
Only agriculturists with landholdings above 50 acres have the practical potential to contribute to income tax if the law is implemented scientifically and properly. However, the majority of the big landlords derive their assets and power from their links with the poor and disempowered people living on their lands. The economic and non-economic dependence of the poor on the landlords confers social, political and even spiritual clout on the landholders. They make money from ‘other’ sources as well. However, these ‘other’ methods are not the exclusive domain of landlords. Some senior bureaucrats and members of the business community outdo them on this count.
Although the provincial contribution of revenue from agricultural tax has stagnated for the last three years at around Rs0.9bn, it can be enhanced phenomenally by implementing the existing law. But that calls for clearing up the ambiguities that characterise our policies on land reforms and empowerment of people. Rationalisation of farming methods is also of the utmost importance.
The writer is deputy commissioner of income tax, large taxpayer unit, Karachi.
OTHER VOICES - North American Press
Preventing another genocide
The New York Times
THE world’s failure to end the killing in Darfur may soon be compounded by renewed fighting in southern Sudan. Another genocide cannot be allowed to happen.The new threat centres on the oil-rich region of Abyei, which is claimed by both Sudan’s government and the semi-autonomous government of South Sudan. Several hundred people have died there in recent clashes between a large group of Arab nomads, the Misseriya, and South Sudan’s armed forces. Like the Janjaweed militias that unleashed Darfur’s horrors, the Misseriya are armed and encouraged by Khartoum.
More than two million people died in a 20-year civil war before the Bush administration brokered a peace deal in 2005. The goal was to create a unified democratic state. Sudan’s president, Omar al-Bashir, has since balked at most everything that might make that work….
President Bush — who has done a huge amount of hand-wringing about Sudan and Darfur — should have been pressing Khartoum to keep [its] commitments. But, as ever, there has been far too little follow-through.
… [The] international community must find more effective ways to pressure Khartoum. China, Sudan’s major oil client, has real leverage but has not done nearly enough. Beijing and Russia must suspend arms sales. The United States must keep sanctions in place and consider a no-flight zone over Darfur.
Major players — including Europe and Sudan’s Arab allies — should make clear that Khartoum will pay a stiff price if it attacks the South. The United Nations should increase monitoring of flashpoints in Abyei and work to prevent local clashes from escalating.
The United States and others also need a fallback plan. They need to do a lot more to help southern Sudan build up its government and economy and, if necessary, its ability to defend itself. — (March 14)
Apologise, Ferraro
The Seattle Times
HEADS up, political junkies … up! A nation with the longest-running presidential campaign in history ought to observe a high level of dignity on matters of race and gender.
Former vice-presidential candidate Geraldine Ferraro, who had served on Hillary Clinton’s campaign finance committee, foolishly said, “If Obama was a white man, he would not be in this position,” referring to the strength of Barack Obama’s candidacy.
Ferraro should stop talking about how much it hurts that people view her as a racist — she is not — and apologise for an ill-considered comment.
A country finally evolved enough to entertain the candidacy of the first African-American president or first female president ought to take the high road as often as possible.
Ferraro embarrassed Clinton, too … Everyone makes slips of the tongue. The sturdiest among us apologise.
Obama has not made race an issue. The half-white, half-African-American candidate is not running to right a racial wrong. He seeks the office because he has the vision, judgment and temperament to lead.
… Obama said Ferraro is a slice-and-dice politician and accused her of dividing the Democratic Party. Ferraro needlessly injected a racial component into the campaign. Clinton could have more forcefully admonished Ferraro but did say, “I certainly do repudiate” the remark, adding Ferraro doesn’t speak for the campaign.
Obama was predictably calm, saying it was a good thing this issue came up now because it would have come up some time: “I don’t want to deny the role of race and gender in our society. They’re there and they’re powerful. But I don’t think it’s productive.”
The presidential campaign has eight months to go. Every topic will arise repeatedly. Ferraro can end her second 15 minutes of fame with a simple and sincere apology. — (March 14)