‘New taxes to reduce agri income by Rs244b’

Move will affect production: farmers representative.


Express May 23, 2011

HYDERABAD:


Pakistan will lose at least Rs244 billion in agricultural income if the government goes ahead with new taxation measures and withdraws subsidies from the sector.


“The effect of 17 per cent sales tax, 2.5 per cent federal excise duty and taking back of subsidies on agricultural instruments, machinery, fertiliser, seeds and pesticides will be felt in the form of food shortage, inflation and import of edibles,” warns Sindh Abadgar Board President Abdul Majeed Nizamani.

Speaking at a press conference on Monday, Nizamani argued that the burden on growers of enhanced expenditure on buying agricultural inputs will affect the common man. “Indus delta, Kacho, Thar and Kohistan farmers are the poorest, but they will also pay the tax and are deprived of subsidies,” he said.

He claimed that in January, a urea bag cost Rs1,040, whereas now it costs Rs1,400 to Rs1,500.

Citing a State Bank report which revealed that the agriculture sector generated more than Rs3 trillion in revenues in fiscal year 2009-10, Nizamani said the report had failed to mention the cost of cultivation, which stood at Rs2.2 trillion. “After levy of taxes and withdrawal of subsidies that contribution will reduce by Rs244 billion.” The government’s move, according to him, will affect production of wheat, cotton and rice.

Mehmood Nawaz Shah of Sindh Abadgar Board said without subsidies and imposition of new taxes, the growers will be compelled to limit the use of nutrients which are essential for the growth and survival of plants.

“Against the global standard of 300 to 400kg per acre, farmers in Pakistan use around 145kg nutrients per acre, which is less than the plant requirement,” he said.

With less production of wheat, cotton and rice, import of edible items will become inevitable, he added.

Published in The Express Tribune, May 24th, 2011.

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