Punjab farm tax

Punjab’s new agriculture tax aims to raise revenue but faces challenges in implementation and fairness.

The passage of legislation to impose agriculture tax in Punjab is a step in the right direction. It was exempted for decades because of obvious political reasons as land-wielding classes were instrumental in arm-twisting any such attempt, and in collision with tax officials were able to maneuver whatever little levies they were supposed to pay on agrarian lands.

The Punjab Agricultural Income Tax 2024 Bill has come as an umbrella to effectively tax farm incomes, including livestock. Though this was done to fulfil one of the IMF conditionalities, it goes without saying that it was essentially desired to not only raise a lawful and entitled source of revenue but also to end the monopoly that the feudal component had enjoyed by remaining aloof from their share of liability towards national economy.

The biggest riddle, however, is that the tax machinery in Pakistan is corrupt and officials do not have the capacity to access proper revenue estimates from crops. The present Patwari-based revenue system has enough loopholes, and operates in a world of whims and wishes of its own.

Digitisation of land, correct estimates of acre per yield, number of crops cultivated in two seasons and now livestock data will be of essential importance to make the legislation a success. Otherwise, it will be like putting the cart before the horse, and will be fraught with consequences.

Moreover, a super tax that will come into effect on high-income farmers with the abolition of exemption on agricultural land will require some minute shadowing.

Agriculture accounts for 23% of the GDP, and is abysmally low in terms of tax-to-GDP ratio of below 10%. The bill has brought earnings from 'commercial' or 'income-generating' livestock into the tax net and scrapped exemptions on landholdings of less than 12.5 acres, and on absentee landholders.

Introducing AIT rates for individuals and businesses on a par with federal income tax rates is a great addition in the new law, and one hopes other provinces will also come up with their share in the national kitty. Balochistan, especially, is a treasure trove in livestock and rightful taxation will be of great value.