While farmers are not currently liable to income tax, they however contribute to the national exchequer via indirect taxes on agricultural inputs. This was stated by Federal Minister for National Food Security and Research Sikandar Hayat Khan Bosan while addressing at a policy seminar titled “Fiscal Space for Investment in Agriculture- A review of Taxes and Subsidies in Agriculture in Pakistan”
The federal minister highlighted that despite agriculture’s importance in terms of economic growth, poverty and welfare of the poor households. It has never been a budgetary priority. The benefits of untargeted subsidies in agriculture sector are unclear and vague. The situation has worsened since devolution. Provincial agricultural budgets have declined. The minister reiterated that this study was initiated to address these issues by adopting a systematic and evidence based approach. Once a comprehensive picture of both the agricultural taxes and subsidies is clear, budgetary allocations can be made more appropriate.
The seminar was arranged to discuss research findings on net fiscal position of agriculture sector. The study was conducted in partnership with Pakistan Strategy Support Program, a project of International Food Policy Research Institute. Dr Stephen Davies, Senior Research Fellow IFPRI presented the research findings. Net fiscal position of agriculture sector, government outlay in agricultural sector, fertilizer subsidies, operation and maintaince cost of irrigation system, outlays on wheat procurement, agricultural taxation and subsidies came under review in the discussion.
It was agreed that in order to maintain competitiveness in international markets, cost of production needs to be brought own. Investment in research and development can only contribute towards lesser cost of production and greater yield. The minister appreciated Dr Stephen Davies for his comprehensive review and hoped that the study would help the policy makers in streamlining budgetary allocations for agriculture.
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