‘Subsidies do not reach farmers’

Friday, June 19, 2009 (The News International)
By Mehtab Haider

ISLAMABAD: Pakistan People’s Party Senator Sughara Imam and the finance ministry high-ups on Thursday differed over bringing agriculture income under the tax net.

However, the Senate Standing Committee on Finance, in a meeting, was unanimous in recommending the State Bank of Pakistan to reduce interest rates on agriculture loans to single digit as well as for industrial and other sectors in order to revive growth.

During the meeting, the Secretary Finance Division, Salman Siddiq, extended all-out support for the imposition of agriculture income tax as well as for abolishing subsidies provided to the sector. “Subsidies do not reach poor farmers by the end of the day.”

Citing the example of rice, he said that it did not reach the poor farmers, as he knew it from his personal experience being an agriculturist.

“The income from agriculture should be brought into the tax net,” the Secretary Finance said and added those farmers who possess less landholding were facing losses, no one was asking to bring them into tax net. But those who are earning income why they should not pay their due taxes, he questioned?

Finance Ministry high-ups also sternly opposed the demand of the treasury senator to subsidize the agriculture sector as being done in USA and European countries. “We actually provided subsidies to US farmers by allowing imports of agriculture products in last 60 years,” the senator Sughara Imam said during the Senate Standing Committee on Finance, which met with Senator Ahmed Ali in the chair on Thursday to finalize recommendations for 2009-10.

She said that the USA and European Countries were providing huge subsidies to their farm sector in terms of GDP ratio but the government was eliminating subsidies under the IMF program. The subsidies on urea are not meant for farmers because it does not transfer into farmers’ benefits, she added.

Referring to the Advisor to PM on Finance Shaukat Tarin’s statement about tendering resignation in case he failed to bring agriculture income tax in the next few years, Sughara Imam said that the Advisor should resign because he remained unable to bring other sectors into the tax net.

Senator Haroon Akhtar of PML (Q) said on the occasion that the government provided Rs950 per 40 kg support price to wheat farmers, which was actually higher than the international market.

On this occasion, Secretary Finance replied that he was basically against the subsidies regime. On one side subsidies are being sought while on other side the agriculture income tax is also opposed. The top hierarchy of political leadership should take decision on imposing this tax, he added.

“The subsidy on agriculture sector is not a class issue,” Sughara Imam said and added that she was discussing the issue of agriculture income tax but actually wanted to know exactly how much the government was giving subsidy to this neglected sector.

Additional Secretary Finance, Asif Bajwa told the meeting that the government was allocating Rs10 billion subsidy on import of urea, Rs4.7 billion for agriculture tube wells in Balochistan and Rs2.7 billion for WAPDA tube wells in 2009-10.

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