Q-29 = Discuss in brief arguments in favor and against imposition of tax on agricultural income in Pakistan
AGRICULTURAL INCOME TAXVarious Commissions and Committees appointed by the Government have recommended about the levy of agricultural income tax but nothing has been done so far and this issue is yet to be resolved.
ARGUMENTS IN FAVOR OF AGRICULTURAL INCOME TAX
1 Principle of equity
2 Agricultural income has increased
3 Industries income is shown as income from agriculture
4 Illegal income is used in partnership with landlords
5 Development expenditures of Govt. on agriculture
1. PRINCIPLE OF EQUITYLandlords do not pay income tax which is not fair and is against the principle of equality. When industrialist and professional pay tax, landlords should also contribute in national exchequer of the state.
2. AGRICULTURAL INCOME HAS INCREASEDDue to heavy expenditures of Govt. on providing physical infrastructure, such as farm to market roads, regulated markets, storage facilities, electricity and irrigation facilities, agricultural output and income of the landlords has increased. They should now pay tax. This will help in increase of tax collection base and economy will grow further.
3. INDUSTRIES INCOME IS SHOWN AS INCOME FROM AGRICULTURELandlords are also engaged in industries, they hide the tax by declaring that their income has not been obtained from industries and not from the agricultural produce.
4. ILL-LEGAL MONEY USED IN PARTNERSHIP WITH LANDLORDSInfluential Govt. officers and political leaders having secured illegal money by corruption or otherwise convert it into white money by entering into partnership with their landlord friends and relatives. Many times the industrialist and other businessmen also enter into fictitious loan agreements for their business purpose with landlords and thus avoid paying taxes.
5. DEVELOPMENT EXPENDITURE OF GOVT. ON AGRICULTUREHuge expenditures are incurred by the government on developments programs of agricultural sector particularly on the construction of dams, canals, roads from farms to markets etc. It is therefore justified that landowners should contribute some money by way of taxes to the government.
ARGUMENTS AGAINST AGRICULTURAL INCOME TAX
1 Tax collection is not economical
2 Facilities of subsidies are not available to farmers
3 Discourage investment in agriculture
4 Reduce the standard of living
1. TAX COLLECTION IS NOT ECONOMICALIt is very difficult to assess the income from agriculture because it is not certain and depends upon natural factors. Some times output is greater and some time it is too low due to famine, floods, pest and insects attacks.
2. FACILITIES OF SUBSIDIES ARE NOT AVAILABLE TO FARMERSGovt. provides subsidies on fertilizers, better quality seeds and machinery but practically these facilities are not reached to poor farmers rather government agencies involved in this process take advantage. Since subsidies are not availed, farmers say then why to pay tax.
3. DISCOURAGE INVESTMENT IN AGRICULTUREOur agriculture requires modernization. Modern methods of cultivation as adopted by western countries cannot increase agricultural output. The use of modern technique s requires huge investment. If agricultural income tax is imposed, this will reduce income of farmers and they will not be in a position to save and modernize the system. Moreover big landlords will shift the tax burden on poor farmers, who are their tenants and the actual tillers of the soil.
4. REDUCE THE STANDARD OF LIVINGThere is already general as well as disguised unemployment in agricultural sector, because agriculture is a seasonal factor. Imposition of tax will further deteriorate the standard of living of farmers.
AGRICULTURAL INCOME TAXVarious Commissions and Committees appointed by the Government have recommended about the levy of agricultural income tax but nothing has been done so far and this issue is yet to be resolved.
ARGUMENTS IN FAVOR OF AGRICULTURAL INCOME TAX
1 Principle of equity
2 Agricultural income has increased
3 Industries income is shown as income from agriculture
4 Illegal income is used in partnership with landlords
5 Development expenditures of Govt. on agriculture
1. PRINCIPLE OF EQUITYLandlords do not pay income tax which is not fair and is against the principle of equality. When industrialist and professional pay tax, landlords should also contribute in national exchequer of the state.
2. AGRICULTURAL INCOME HAS INCREASEDDue to heavy expenditures of Govt. on providing physical infrastructure, such as farm to market roads, regulated markets, storage facilities, electricity and irrigation facilities, agricultural output and income of the landlords has increased. They should now pay tax. This will help in increase of tax collection base and economy will grow further.
3. INDUSTRIES INCOME IS SHOWN AS INCOME FROM AGRICULTURELandlords are also engaged in industries, they hide the tax by declaring that their income has not been obtained from industries and not from the agricultural produce.
4. ILL-LEGAL MONEY USED IN PARTNERSHIP WITH LANDLORDSInfluential Govt. officers and political leaders having secured illegal money by corruption or otherwise convert it into white money by entering into partnership with their landlord friends and relatives. Many times the industrialist and other businessmen also enter into fictitious loan agreements for their business purpose with landlords and thus avoid paying taxes.
5. DEVELOPMENT EXPENDITURE OF GOVT. ON AGRICULTUREHuge expenditures are incurred by the government on developments programs of agricultural sector particularly on the construction of dams, canals, roads from farms to markets etc. It is therefore justified that landowners should contribute some money by way of taxes to the government.
ARGUMENTS AGAINST AGRICULTURAL INCOME TAX
1 Tax collection is not economical
2 Facilities of subsidies are not available to farmers
3 Discourage investment in agriculture
4 Reduce the standard of living
1. TAX COLLECTION IS NOT ECONOMICALIt is very difficult to assess the income from agriculture because it is not certain and depends upon natural factors. Some times output is greater and some time it is too low due to famine, floods, pest and insects attacks.
2. FACILITIES OF SUBSIDIES ARE NOT AVAILABLE TO FARMERSGovt. provides subsidies on fertilizers, better quality seeds and machinery but practically these facilities are not reached to poor farmers rather government agencies involved in this process take advantage. Since subsidies are not availed, farmers say then why to pay tax.
3. DISCOURAGE INVESTMENT IN AGRICULTUREOur agriculture requires modernization. Modern methods of cultivation as adopted by western countries cannot increase agricultural output. The use of modern technique s requires huge investment. If agricultural income tax is imposed, this will reduce income of farmers and they will not be in a position to save and modernize the system. Moreover big landlords will shift the tax burden on poor farmers, who are their tenants and the actual tillers of the soil.
4. REDUCE THE STANDARD OF LIVINGThere is already general as well as disguised unemployment in agricultural sector, because agriculture is a seasonal factor. Imposition of tax will further deteriorate the standard of living of farmers.