IMF proposes 45 percent tax on agriculture income

The International Monetary Fund (IMF) has suggested that the government impose income tax of up to 45 percent on agriculture income as Pakistan seeks another multi-billion dollar bailout to stabilise its economy.

The condition is part of the structural benchmarks the IMF has set for Pakistan to follow in order to access the next IMF loan that the country is negotiating with the global lender, Tribune reported.

It also reported that the IMF has set October 2024 as the deadline for amending provincial tax laws to align with federal tax laws.

Under the constitution, the federal government cannot impose taxes on agricultural income, as it is the provinces’ responsibility.

Currently, the provinces are authorised to collect taxes from the agriculture sector, which contributes 24 percent to the economy but does not contribute even 0.1 percent of the total taxes collected across the country.

President Asif Ali Zardari expressed apprehension at the move, saying the government was planning to tax agricultural income as per the IMF’s condition. Still, the provincial governments will lead the initiative to tax large land-holding farmers per their profitability and expenditures.