Agriculture sector accounts for less than 1 percent of taxation in Pakistan
- According to the recent economic survey, agriculture growth amounts to 2.9 percent.
- The tax contribution by this sector is at a bare minimum.
- The industrial sector contributes some 20 percent in the GDP and is overburdened with taxes.
As Pakistan is faced with the challenges of widening the tax net and has to collect some 5,500 billion PKR in tax amounts let us take a brief review of the tax net and GDP contribution by different sectors of the economy.
According to the recent economic survey, agriculture growth amounts to 2.9 percent. But the tax contribution by this sector is a bare minimum and less than 1 percent. A major chunk of Pakistan’s population is attached to agricultural income and tax collection from this sector is meager highlighting the lapses in the policy formation.
The industrial sector contributes some 20 percent in the GDP and employs nearly 24 to 25 percent of the population. According to the President Pakistan Business and Intellectuals Forum Mian Zahid Hussain, the collection of a mere 2 billion rupees from the sector representing 19.2 percent of the GDP is a joke.
He also suggested that the responsibility to adjust the agriculture sector into a tax net should be given to the tax collection body – Federal Board of Revenue.
He also said that the industrial sector is 21 percent of the GDP but it is paying seventy percent taxes, the services sector is sixty percent of the GDP but it is paying almost 30 percent of the taxes.
According to the latest figures, the service sector contribution to GDP is 61.2 percent and more than 38 percent of the country’s population is currently associated with this sector.
The large debt payments, budget, and trade deficit and more than 30 percent of Pakistan’s economy that go undocumented pose some real challenges to the economy besides a marginalized tax net. Once the agriculture sector comes in the tax net, the tax base would automatically go up decreasing the pressure on the industrial sector of the country.
How do you see the reforms done by the incumbent government to increase the tax net in Pakistan? Share your thoughts in the comment section below