POVERTY: Taxing farm products: Malnutrition may increase by 10%

Farmers propose tax on agriculture income instead of consumption.

ISLAMABAD: The government’s proposal to tax 136 farming products may result in a food crisis, as the move will push prices up by 30 per cent and increase malnutrition by another 10 per cent, said farmers’ representatives.
On Thursday, the Farmers Associates of Pakistan (FAP), a body working to promote farmers’ interests, gave a presentation to the National Assembly Standing Committee on Finance about the negative implications of the reformed general sales tax. They proposed the government to levy a tax on agriculture income instead of taxing consumption.
The committee, for the consecutive second day, arranged public hearings to address the grievances of the business community. It has postponed clause by clause reading of the contentious bill till next week.
The farmers’ representatives said the government’s proposal to tax a total of 136 items will result in an increase in prices of agriculture inputs that will ultimately result in at least 10 per cent reduction in production.
“Average per capita calories consumption in Pakistan is 2,390, which is already 24 per cent lower than the world average per capita calories consumption and 10 per cent reduction in production will result into 30 per cent increase in prices”, said the executive director of the Farmers Associates. The ultimate result will be that people from poor and lower middle classes will not have enough money to buy expensive foods, after paying for other necessities.
The representatives said 12 agriculture products, 22 dairy items, 26 kinds of machinery items and 76 kinds of pesticides will be taxed under the regime. The government will generate Rs50 billion in revenue. The Federal Board of Revenue (FBR) did not contest the figures provided by the FAP.
The associates said that after a 15 per cent tax on fertiliser, prices will increase from Rs150 to Rs400 per 50 kilogram bag and the government will earn revenue of Rs27 billion. A 15 per cent tax on tractors will generate Rs7 billion in taxes and increase prices from Rs 100,000 to Rs 200,000 depending upon the horsepower.
“Do not tax the agriculture consumption, but tax the agriculture income,” they proposed. They said that 87 per cent farmers own less than 12 acres land and 12 per cent own 12 acres or above. There are only 1.5 per cent landlords who own over 100 acres and there are 37 per cent that have even less than one and half acres. “The consumption tax will affect them alike,” the representatives said.
The National Assembly Standing Committee on Finance grilled the tax authorities for massive corruption in the department and pushed them to generate money by controlling leakages instead of overburdening the taxpayers.
The All Pakistan Textile Mills Association briefed the committee about the negative impact of the GST on the textile industry. Its chairman Gohar Ejaz said that he was not against taxing the domestic supply of garments. “The industry’s major concern is that refunds of over Rs500 billion will be blocked in FBR due to massive corruption,” he added.
Out of Rs518 billion, refunds of Rs317 billion will be adjusted within the textile chain and Rs 120 billion will be stuck in FBR refunds for 45 day, said Chairman FBR Sohail Ahmad.
Fauzia Wahab constituted a sub-panel to address the grievances of the textile industry. The committee will resume public hearings today (Friday). The voting on the GST bill will take place next week.
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