Income tax looms for farmers

Farmers may soon have to pay taxes for their income from agriculture, Finance Minister AMA Muhith said yesterday.

At present, a person whose only source of livelihood is agriculture stands to get tax exemption on incomes of up to Tk 4.5 lakh a year, according to the income tax law.

“Farmers' incomes are rising. Incomes from agriculture should not be fully exempted from tax,” he said at a discussion on the budget for fiscal 2016-17.

Agricultural incomes will remain tax-free for the next two years, but after that the privilege may be lifted, Muhith said.

The event was organised by the Bangladesh Agricultural Economists Association at the Bangladesh Agricultural Research Council in Dhaka. BAEA President Shamsul Alam chaired the discussion. Discussants at the programme called for increased allocation for overall agricultural development, ensuring fair prices to growers to retain farmers' interest in farming, continuation of subsidy for farm inputs and support for disseminating technologies and equipment.

Some also urged the government to purchase grains directly from farmers by forming producers' organisations.

Muhith, however, said the government tries to buy paddy directly from growers but cannot go through with it as farmers cannot supply grains with the stipulated moisture content.

As a result, the bulk of the rice is bought from millers, who end up getting generous benefits, he added.

“But farmers get the benefit of subsidy for input,” said Muhith, citing the subsidy for fertilisers and seeds as examples.

The government also gives duty benefits to encourage local production of farm machinery, he said.

“Bangladesh's agriculture has made significant strides in the past couple of decades. Rice production has more than trebled since independence. Production of other crops such as vegetables also rose over the years.”

He, however, went on to call for a change in the cycle of production, citing sugarcane as an example.

“We should get out of sugarcane. It is the worst possible commodity that we produce.”

The crop takes nine months to mature and “destroys” soil, he said, adding that in 1988 he estimated that the annual welfare loss for sugarcane cultivation was Tk 400 crore.

Muhith also stressed the need for an increased focus on livestock farming. “We should pay special attention to livestock. We are still dependent on imports for milk.”

Muhammad Abdur Razzaque, chairman of the parliamentary standing committee on the finance ministry, said it is difficult to buy grain directly from farmers. Instead, the government should directly provide input support to growers.

Razzaque, also a former food minister, called for measures to bring down the growers' cost of irrigation, as it accounts for 29 percent of the total cost of production.

He suggested providing farm loans at 4-5 percent interest rates, as the farmers' endeavour helps the country save huge amounts of import bills.

“There is a lot of scope to give support to agriculture.”