LARKANA, Feb 11: The Sindh Abadgar Board has strongly reacted to the government’s attempts to levy farm tax and said it is widely misconceived the agriculture sector enjoys tax exemptions although it is overburdened with a number of direct and indirect taxes.
In a letter dispatched on Monday to the chairman of the Senate’s standing committee on agriculture which is busy studying proposals for levying farm tax, Gada Hussain Mahesar, central vice-president of SAB, rejected the misconception and said that the farm sector was paying a variety of direct and indirect taxes.
He said the sector paid seven direct taxes which were: land revenue, water tax, agriculture tax, drainage tax, education cess, marketing fee and sugarcane cess.
And it paid various indirect taxes on purchase of diesel, chemical fertilisers, pesticides, machinery and other farm inputs, he said.
It was, therefore, not advisable to either raise the rate of farm income tax or levy a new tax on the sector, he said. Contrary to many countries of the world where governments granted subsidies to farmers, no Pakistani government had taken any step to develop farm sector, he said.
Besides, he said, it was grossly unjust to impose tax on both cultivated and uncultivated land. Why should a farmer pay tax on uncultivated, barren portion of his land, he asked.
He disagreed with the idea to take back the few exemptions the sector enjoyed and said the farm industry involved too much risk factor.
It was entirely dependent on nature and was always exposed to onslaught of heavy rains, floods, insects and pests attacks, he said. Mr Mahesar said that in valuation of land, urban and rural land should not be treated equally because at present, average rate of agriculture land in rural area was about Rs100,000 to 200,000 per acre while in urban area average value of a plot was Rs2,000 to Rs3,000 per square foot.
He said the SAB vehemently opposed the proposal for handing over job to collect farm tax to the department of excise and taxation because it feared it would open up new windows of corruption. The entire structure of tax collection needed to be revamped as its many lacunae led to leakages of revenue, he said.
“Take for instance the rice crop, which is cultivated on 2.2 million acres in Sindh and its tax rate is approximately Rs350 per acre, which adds up to a huge amount of Rs770 million,” he said.
The government, he said, should check where this amount went besides revenue from taxes on orchards, pulses, grams, sugarcane, cotton, oilseeds and vegetables. Was the tax deposited in treasury or siphoned off through administrative loopholes, he said.
Instead of shifting tax burden to agriculture, he said, the government should restructure existing system of tax collection and submission and make arrangements to plug leakages.