The International Monetary Fund (IMF) has proposed a new standard individual income tax rate of up to 45 percent on agricultural income.
This is one of the requirements of the IMF for a new bailout program. The IMF has set an October 2024 deadline for the provincial laws to be aligned with federal income tax laws and for existing income tax exemptions for the livestock sector to be rescinded by October this year, reported Express Tribune.
Currently, the federal government cannot impose taxes on agricultural income, as this power is constitutionally granted to the provinces. The IMF has suggested that provinces adopt the federal tax rates for non-salaried business individuals. For non-salaried individuals, the new tax rate is 45 percent of net income, which increases to 50 percent with surcharges. The IMF demands this 45 percent rate be applied to agricultural income as well.
The World Bank estimates that taxing agricultural income could yield revenue equal to 1 percent of Pakistan’s GDP, amounting to Rs. 1.22 trillion. Provincial governments have largely agreed to the IMF’s demands, despite some resistance regarding the high tax rates.
The IMF’s condition requires provinces to amend their agricultural income tax regimes to match federal personal income rates. For corporate farming, the corporate income tax rate would apply. The IMF also insists that provincial governments end the current income tax exemption for livestock income by October.
Starting in January 2025, provinces must begin collecting up to 45 percent of agriculture income tax to appease the IMF. If any provincial government is unable to do so, it must authorize the Federal Board of Revenue to collect the tax until a provincial mechanism is developed.
Currently, provincial tax rates for agriculture vary significantly. In Sindh, incomes up to Rs. 1.2 million are exempt from tax, with rates ranging from 5 percent to 15 percent for higher incomes. Comparatively, a salaried individual pays 35 percent on an annual gross income of Rs. 4.1 million. This disparity has led to criticism, particularly from salaried workers who feel they bear an unfair tax burden.
The IMF believes these new tax rates will eliminate disparities in the income tax system by ensuring agricultural income is taxed similarly to other income.
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Agar ye asal baap ki ulad hain to jesy bijli ki price IMF ky kehny pr rato raat barha di thi ab wesy hi agriculture income pr bhi lagaain.
Bojh sirf ghareeb adami pr hi kiyo?
No landlord will allow it. Also livestock are barely able to make any money
Then, no bailout :(
This wish will never come true because it mostly hurts the rich rather than the poor.
The agriculture elite can pay income tax on
their profits easily