Pakistans Agriculture not taxed, rather subsidies

June 14th, 2009 by Israr, Pakistan No Comments

ISRAR KHAN ISLAMABAD: Pakistans influential agriculture lobbies, both inside and outside the government machinery, have once again succeeded in pushing the government to exempt the politically-sensitive sector from taxes in the budget for the fiscal 2009-10 announced Saturday. The irony is that at the moment, there is about one third of the National Assembly members are big landlords holding hundreds and thousands of acres agriculture land. One acre comprises 4,840 square yards. Keeping the sector untaxed indicates that 22 per cent of the GDP would still be out of the tax net and big farmers earning billions of rupees green income would contribute zero to the countrys tax revenues the next year. The government also announced Rs 12.69 billion subsidy for the sector that would ultimately go into the pockets of landlords. A notable feature of the budget 2009-10 is that the government has not announced such visible incentives for the agriculture sector that could benefit the small farmer directly. Minister of State for Finance and Economic Affairs Ms. Hina Rabbani Khar, (who is also a landlord) while presenting the Federal Budget 2009-10 before the National Assembly, announced the overall Public Sector Development Programme (PSDP) allocation for agriculture at Rs18 billion during the next fiscal that was 25 per cent more than the revised estimates of Rs 14.4 billion in the fiscal 2008-09, while its original allocation in the last years budget was Rs 20.52 billion. She also envisaged that the agriculture sector would grow by 3.8 per cent during the fiscal 2009-10. This will be achieved through increasing productivity and value addition in agriculture, she said. It is worth mentioning that in Pakistan, there are about 88 per cent farmers having less than 12.5 acres of land, while other 12 per cent are big farmers with way larger land holdings. The government has been dolling out billions of rupees of subsidy on the agriculture sector with a view to support the small farmers and help boost their incomes as a result of high production. But, in reality it is the big landlords who have been the real beneficiaries in the name of small farmers and have contributed zilch to the national exchequer. These lobbies are so powerful that at the launch of the Economic Survey 2008-09 the other day, Adviser to the Prime Minister on Finance Mr. Shaukat Tarin had to confess that he was ready to tax this sector, but he would be subjected to martyrdom the next day. During the last 62 years, nobody has dared to impose taxes on the agriculture sector because of the strong lobbies in the country. Advisor Mr. Tarin said the government would levy taxes on the real estate and services sectors. However, two other sectors stock exchanges and agriculture would be included in the tax net next time. Hina Rabbani Khar, presenting the budget 2009-10, said the government will formally introduce geneticallymodified cotton into Pakistan on fast-track basis. It has been planned that the farmers will be offered the BT

cotton hybrid varieties during the fiscal 2009-10. It is the vision of the government to treat the livestock, agriculture and fisheries sectors as an industry. She said self-reliance in commodities, food security through improved productivity of crops as well as development of livestock and dairy would be the main pillars of the policy. More importantly, the government would continue to ensure a minimum guaranteed price to the farmers, based on international comparisons. The government would also focus on promotion, production and export of high-value crops; acceleration of the move towards high-value activities, such as livestock rearing, dairy production, fisheries and horticulture; creation of necessary infrastructure and insurance of agri-credit availability. In 2009-10, the government would establish 10 model agricultural union councils for each major crop across the country and support the promotion of model organic farming. FISHERIES: The government has also announced that during the fiscal 2009-10, focus will be on lifting the European Unions ban on fisheries export by upgrading fishing vessels, improving infrastructure facilities for value-added products, establishing a fisheries training centre in Gwadar, landing sites along the coastal line, reducing post-harvest losses through improved fish handling along the food chain and marketing and establishing the shrimp aquaculture in the country.