Tax on agriculture income: Agriculture taxed or not, Sindh lawmakers debate

Despite Sindh govt’s claims of collection, amount remains abysmally low

KARACHI:

Does a tax on agriculture income exist in Sindh?

The answer depends on which political party you choose to believe in. For the ruling PPP, tax on agriculture income is in place and duly collected every year.

But for the MQM, which derives its support mainly from the urban areas of Sindh, tax on agriculture simply does not exist in the province.



Interestingly, confusion about the existence of such a tax is not limited to ordinary workers and supporters of the two parties.

MQM’s parliamentary leader in the provincial assembly and former Sindh finance minister Syed Sardar Ahmed confronted the adviser to the Sindh chief minister on finance Syed Murad Ali Shah during a public event last week when the latter claimed the tax on agriculture income was well in place and collected annually.

“You’re wrong. Agriculture income is not taxed in Sindh,” Ahmed said loudly from his front-row seat, as the de facto finance minister of Sindh delivered his keynote address at a seminar organised by the United Nations Development Program (UNDP) on October 23.

“Ignorance is bliss,” Shah said, adding that he could personally identify at least two people among the audience who paid annual tax on agriculture income.

Saying that a 15% tax on agriculture income exceeding Rs300,000 a year was already levied on farmers of the province, Shah advised Sindh’s former finance minister from the MQM to get his facts right.

So which one of the two politicians was right? Apparently, both were being truthful at least partially.

The tax on agriculture income is indeed in place in Sindh as evidenced by the provincial budget documents. However, much to the MQM’s dismay, its collection remains pitifully low.

The budget estimate for total provincial tax receipts for 2014-15 is Rs107.02 billion. The tax on agriculture income is estimated to be Rs512.11 million for the same fiscal year. This constitutes merely 0.47% of the total projected provincial tax receipts in 2014-15.

Furthermore, while the Sindh government aims to collect only Rs512.11 million as tax on agriculture income, agriculture subsidies that it has promised for 2014-15 amount to a staggering Rs3.1 billion.

According to Sindh’s former (caretaker) finance minister Syed Shabbar Zaidi, the reason for the extremely low collection of the tax on agriculture income is the provincial government’s unwillingness to take on the vested interests.



His assertion is validated by the fact that the Sindh government does not have a dedicated body for the collection of the tax on agriculture income. Unlike the sales tax on services for which the government has set up the Sindh Revenue Board (SRB), the agriculture tax has received no special attention from the government so far.

Speaking at the seminar, Shah said his government is going ask the federal authorities to transfer the sales tax collection job to the province from the next fiscal year. Referring to the sales tax on services, which is a provincial subject now, Shah said the Sindh government has tripled the amount collected by the SRB in just three years.

“Let us do what we are good at doing,” he said while making a case for the transfer of the sales tax collection from federal to provincial authorities.

His idea received instant approval from MQM MNA Farooq Sattar who was also present at the seminar.

“We’ll support you on this issue, but only if you promise to show the same kind of enthusiasm about collecting agriculture income tax,” Sattar said from the audience while interrupting the speech of the finance adviser.

“Farooq Bhai always imposes conditions,” Shah said, smilingly, while steering clear of making any such promise.

The writer is a staff correspondent

Published in The Express Tribune, October 27^th, 2014.

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