Karachi, April 26, 2024 – The Korangi Association of Trade and Industry (KATI) has made a strong appeal for the inclusion of agricultural income in the national tax framework in the upcoming 2024-25 budget announcement.
This demand comes amidst growing concerns over the uneven tax burden borne by different sectors of Pakistan’s economy.
During a press briefing on Friday, KATI President Johar Qandhari highlighted the significant imbalance in the taxation landscape, pointing out that while agriculture contributes about 30 percent to the Gross Domestic Product (GDP), it remains largely exempt from taxes. In contrast, the industrial sector, which accounts for 20 percent of the GDP, is heavily taxed through various duties, regulatory fees, and sales taxes.
“The current tax system disproportionately impacts industrialists, who are already grappling with myriad financial obligations imposed by the state,” Qandhari said. “Meanwhile, substantial revenue potential from the agricultural sector goes untapped, benefiting large landowners and middlemen but not the economy at large.”
Qandhari elaborated on the need for a fair and balanced tax policy, suggesting that while small farmers and cultivators should continue to enjoy certain tax exemptions and incentives to support their sustainability and growth, wealthier landlords and agricultural middlemen should be brought into the tax net. According to him, this approach would not only create a more equitable tax environment but also provide much-needed income levels and debt relief for smaller farmers, who are often the backbone of the rural economy.
The KATI president also emphasized the crucial role of the industrial sector in propelling economic growth, creating job opportunities, and earning foreign exchange through exports. He argued that a more balanced tax policy would enable further growth and stability in the industrial sector, potentially increasing its contributions to the national economy.
Qandhari urged the government to consider these aspects in its fiscal planning to ensure a more equitable distribution of economic responsibilities and benefits. He called for special incentives for the private sector that could attract more foreign investment and stimulate overall economic activity.
“Reforming the tax system to include the agricultural sector can lead to a broader tax base, reducing the individual tax burden and enabling more comprehensive development projects across the country,” Qandhari added. “It’s about creating a level playing field for all sectors, thereby fostering a more resilient economy.”
This stance by KATI reflects a growing sentiment among various industry leaders who believe in the need for tax reforms that not only boost government revenues but also ensure fairness and encourage compliance across all sectors.
The government’s response to KATI’s call will be closely watched by industry stakeholders and financial analysts, as it could signal significant shifts in economic policy aimed at addressing longstanding disparities in Pakistan’s taxation system. As the budget formulation process progresses, the potential inclusion of agriculture in the tax net remains a key issue of debate likely to influence economic strategies in the coming years.
