Issues Pak Economy Lec 5 Agriculture Sector
Issues Pak Economy Lec 5 Agriculture Sector
Issues Pak Economy Lec 5 Agriculture Sector
Cotton and
Cotton
Based
Products
58.60%
Export Patterns
2001-02
Other Other Leather
Engg
Manuf. Sectors 7%
1%
11% 3%
Food
10%
Textile
68%
2014-15
Other
Sectors Leather
7% 5%
Engg.
Other 1%
Manuf.
12%
Textile &
Food
Garments
19%
56%
Agriculture Sector in Pakistan: Problems
I To remove uncertainty
I To increase agricultural production
I Lag between agricultural prices and other prices
I Lack of storage facilities
I Stabilize the tempo of economic growth
I Income disparities
I To increase the standard of living
Agricultural Finance: Sources
Source: AZ Chapter 5
I Whether agricultural income should be taxed?
I People demand imposition of tax on agricultural income as
the share of income from agriculture has risen considerably
during recent times.
I Proponents of agricultural income tax argue that although
agriculture sector contributes 25% in GDP but tax revenues
hovers around 1%.
I Every attempt of bringing direct taxation to the agriculture
sector has proven to be unsuccessful yet, partially due to lack
of political will, institutional capacity and data limitations.
Agricultural Income Tax: Arguments against Income Tax
on Agriculture
Source: AZ Chapter 5
I Since proper accounting mechanisms are not in place due to
the informal way of farming and less education, it is highly
difficult to collect taxes from these farmers.
I Farmers are scattered all over the country that requires huge
cost to access them.
I Agricultural income varies depending upon the weather and
other conditions, which are not in control of any one.
Agricultural Income Tax: Arguments in favor of Income
Tax on Agriculture
Source: AZ Chapter 5
I Already the tax to GDP ratio in Pakistan is very low and this
sector has great potential, therefore, the tax from agricultural
sector can provide good source of revenues.
I A progressive tax structure can bring more revenues without
affecting the small farmers.