By IANS,
Islamabad : Tax on income from agriculture is necessary, says a leading Pakistani daily, warning that “failure to support equity in taxation for short-term political gains would be disastrous for the economy”.
An editorial in the Dawn Wednesday said: “The imposition of tax on income from agriculture may involve political risks but is necessary.”
“The distinction made between incomes from agricultural and non-agricultural sources for the purpose of taxation runs counter to the principle of an equitable tax system and forces the state, in its effort to boost revenues, to overtax a few, and to even tax those who should not be paying any taxes at all.
“A country like Pakistan…cannot afford to exempt agriculture or, for that matter, income from other sources from taxation. That is, not unless the state is totally unresponsive to the development needs of the people.”
Pakistan is an impoverished country and has suffered from years of political disputes. Floods in the middle of last year lowered agricultural output and contributed to a jump in inflation. Reconstruction costs will strain the limited resources.
Pakistan’s GDP (Purchasing Power Parity) was estimated in 2010 at $451.2 billion.
The Dawn editorial said the issue of “ridding the economy of tax exemptions for the rich and powerful has become more visible in recent years because of the yawning gap between the government’s falling revenues and its rising expenditure”.
It observed that “growers are so sensitive about the issue that the slightest mention of tax on their incomes brings them together on one platform across the political divide – even if it means standing up to their party’s leadership”.
The editorial wondered whether action would be taken to “effectively bring income from agriculture into the tax net to boost revenues and the country’s abysmally low tax ratio?”
In a warning to politicians, it said: “The leadership of all political parties must realise that their failure to support equity in taxation for short-term political gains would be disastrous for the economy and add to the hardship of the common man. The more they delay taking the tough decision, the more difficult it will become for them to stop the economic rot.”