Farmers have expressed grave concern over tax proposals in the Finance (Supplementary) Bill 2021, citing that it would dent earnings of the agriculture sector stakeholders.
In a statement on Monday, office-bearers of the Pakistan Kissan Ittehad (PKI) stated that the withdrawal of sales tax exemption on various crop seeds, agricultural inputs and farm implements would have far-reaching consequences for the already struggling farming community.
They voiced fear that these measures would hike the cost of cultivation by 5-10%.
“In addition to the increase in input cost, the Finance (Supplementary) Bill is inconsistent with the government’s policies and the country’s food security needs,” they said.
“Imposition of 17% sales tax on agricultural implements, cotton seed cake, cotton seed oil, maize, rice, canola, sunflower, vegetable and potato seeds will directly impact the cultivation cost and put quality seeds out of the reach of many farmers.”
Furthermore, high taxes will lift prices of these commodities for end-consumers and subsequently add to food inflation. They lamented that these taxes were being imposed at a time when the government was looking to promote oilseed crops through subsidies to lessen the import bill.
“In particular, the tax on cottonseed and its derivatives will adversely impact cotton farmers and the allied industry,” they said.
Similarly, maize crop has a major contribution to the growth of poultry sector because 70% of grain is utilised in making feed. The dairy industry is also highly dependent on the maize crop, with silage requirements increasing day by day. In 2020-21, almost 130,000 tons of grain and 80,000 tons of silage were exported from Pakistan. With the imposition of sales tax on maize seed, the competitiveness of maize crop in the international market will go down, which will hurt the livelihood of farmers.
Rice and vegetable seeds also face the same predicament. The additional tax will discourage the farmers from adopting high-yielding hybrid seeds, resulting in overall productivity loss and food security concerns. Therefore, the government must review its decision to withdraw the sales tax exemption on the key agricultural inputs and provide relief to the farmers during these testing times, the PKI office-bearers added.
Published in The Express Tribune, January 4th, 2022.
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