Pakistan’s Agricultural Tax Higher Than South Asia

Pakistan's agricultural tax burden is significantly higher compared to regional counterparts India, Bangladesh, and Sri Lanka, raising concerns among farmers and policymakers. Experts argue that the heavy taxation on agriculture is adversely impacting the country’s farming sector, which remains the backbone of the economy. According to recent reports, Pakistan’s agricultural tax rate surpasses those of neighboring countries, creating financial strain on farmers already dealing with rising production costs. In contrast, India, Bangladesh, and Sri Lanka offer more favorable tax structures that support agricultural growth and sustainability. Farmers and industry experts highlight that the high taxation is discouraging investment in modern farming techniques and machinery, affecting overall productivity. Additionally, many small and medium-scale farmers struggle to cope with financial pressures, limiting their ability to expand and adopt better agricultural practices. The Pakistan Kissan Ittehad (PKI) and other farmer associations have urged the government to review its taxation policies and introduce farmer-friendly reforms. They emphasize that reducing agricultural taxes will boost productivity, ensure food security, and enhance exports. Economists argue that while taxation is necessary for national revenue, excessive taxes on agriculture could lead to lower yields, reduced competitiveness, and increased inflation in food prices.

In contrast, India and Bangladesh provide tax exemptions, subsidies, and incentives to farmers, ensuring better financial conditions and improved agricultural output. Sri Lanka, despite facing economic challenges, also maintains a lower agricultural tax burden to support its farming community. Pakistan’s agriculture sector contributes around 19% to the country’s GDP and employs a significant portion of the workforce. Experts warn that without immediate reforms, Pakistan may face reduced agricultural output, higher food prices, and increased dependency on imports. Government officials have acknowledged the concerns and assured that agricultural tax policies are under review. They have hinted at possible relief measures to support farmers, enhance productivity, and align tax policies with regional standards. As discussions continue, stakeholders hope for a balanced taxation policy that supports both revenue generation and sustainable agricultural development in Pakistan.