Withdrawal of ST exemption on agri implements: PKI says proposed move to raise cost of cultivation by 10pc

LAHORE: The Pakistan Kissan Ittehad (PKI) has claimed that proposal to withdraw sales tax exemption on agricultural implements, seed and other agricultural inputs will raise the cost of cultivation by 5 to 10 percent.

Expressing its deep concern over the proposals in Finance Supplementary Bill 2021 tabled in the National Assembly, PKI President Khalid Mahmood Khokhar while addressing a press conference on Monday said withdrawal of sales tax exemption for various crop seeds, agriculture inputs and farm implements will have far reaching consequences for the already struggling farming community.

In addition to an increasing input cost, he added the Finance Supplementary Bill is inconsistent with the existing government policy and the country’s food security needs. The 17 percent sales tax on agriculture implements, cottonseed cake, cottonseed oil, maize, rice canola, sunflower, vegetables and potato seed will directly impact the cultivation cost and put quality seed inputs out of reach of many farmers.

It is even more concerning that these taxes come at a time when the government is looking to promote oil seed crops through subsidies to lessen the burden on imports. In particular, the tax on cotton seed and its derivatives will adversely impact the cotton farmer and its allied industry. Similarly, maize crop has a major contribution towards the growth of poultry industry, with 70 percent of grain going into feed. The dairy industry is also highly dependent on the maize crop, with silage requirements increasing by the day. In 2020-2021, almost 130,000 metric tons of grain and 80,000 metric tons of silage were exported from Pakistan. With the imposition of sales tax on maize seed, the export competitiveness of maize crop will face a major challenge and hurt the livelihoods of farmers. Rice and vegetable seeds also face the same predicament. The additional tax will discourage farmers from adopting high yielding hybrid seeds, resulting in overall productivity loss and food security concerns, Khalid Khokhar added.

The Pakistan Kissan Ittehad (PKI) demanded that the government must review its decision to withdraw sales tax exemption on these key agriculture inputs and provide relief to the farmers during these testing times.

Copyright Business Recorder, 2021