AGRICULTURAL INCOME SHOULD NOT BE TAXABLE
BY: Prachi Pandey
Agricultural income has been non taxable in the country since our founding fathers laid down the constitutional code, and it is justified in more ways than one.
The backbone of our country is agriculture. What we must do is give incentive to agriculturists to produce even more quantities of their produce and sell at reasonable rates, rather than trying to demotivate them from increasing their income. If taxes are imposed on the average agriculturists, it will give them an incentive to try to remain in the tax-exempted slab of the tax slabs, so as to avoid taxes which will hamper their prospects of increasing their income and contributing to growth of the economy. The contribution of the primary sector to the GDP has been declining constantly for the past few decades, and if anything, the state should give incentive to farmers to improve their production, in the form of subsidised seeds, cheap access to agricultural technology, and infrastructural development in agriculture driven villages.
If one fine day, it is announced that the government has decided to impose taxes on agricultural income, there will be riots through the length and breadth of the country, which will hamper regular functioning of the nation for days on end. It will also create an opportunity for the opposition parties to take advantage of the sentimental agriculturists and capture vote banks through stereotypical, sweet speeches peppered with promises of a better tomorrow. It may happen that the government finds itself in a helpless situation in front of the agitated agriculturists, and under pressure repeal the taxes, which create doubts about its decisiveness with regard to national policies. Such taxation would also entail problems of income recording and tax assessment and calculation, which is out of the illiterate farmers hands, giving others a chance to cheat them off their money.
The need of the hour is not to tax the agriculturists who work day and night to make ends meet, but to employ policies to check tax evasion through money laundering activities. The burden on account of lax government policies which fail to keep in check practices like tax evasion should not be carried by the agriculturists of the nation. The taxation of agricultural income will drive the already burdened with debt farmer, whose income relies on the unreliable weather, to unimaginable extremes, only aggravating the problem of farmer suicides, which is rampant in the country.
While rich farmers owning BMW cars and townhouses is a testimony to the problem of hoards of non-taxable cash being earned by them, the solution is not to impose taxes, as they will find a way to circumvent the tax authorities by employing a number of means. The victim will be the poor agriculturist who is innocent enough to honestly pay taxes on his meagre income. Rather, tightening of the tax collection system is what is required presently. Taxing agricultural income will not solve any issues.