discuss in favour and against agricultural tax
Answers
Explanation:
Previous OECD work in this area concluded that, while tax policies as they relate to agriculture can take different forms depending upon the country, they can generally be classified according to the following typology: taxes on income, profits and capital gains; social security contributions1 (which are a mixture of tax, duty and insurance); taxes on payroll and workforce which concern farm operators as employers; taxes on property (including taxes on property transfer); and taxes on goods and services (including sales tax and VAT) (OECD, 2005[1]). While the sector is certainly affected by the levying of different tax provisions in these areas, it also benefits relative to other sectors through the granting of tax concessions. A given tax measure is considered to be a “tax concession” to agriculture if it results in differential treatment to the sector in such a way that agriculture is favoured, resulting in some foregone tax revenue, or “tax expenditure”. Furthermore, any given tax measure is only considered as an agricultural tax concession in the OECD framework to measure agricultural support if the policy mainly benefits the agricultural sector and not other sectors to which they may also apply [e.g. fisheries, small and medium-sized enterprises (SMEs)]. Some commonly utilised concessions include special tax rates applied to farmer income; allowing income tax averaging to smooth income across years given that income from agriculture is more volatile than income in most other sectors; special treatment for depreciation (in particular through accelerated write-offs) to encourage investment; preferential treatment on property taxes applied at transfer by sale, gift or death to facilitate farm transition with minimal disruption to producing activities; and preferential treatment on taxes on inputs, outputs, or VAT (including fuel tax exemptions).2 Previous OECD work on taxation in agriculture emphasised that tax concessions are used as a vehicle to achieve a wide variety of objectives in the sector (OECD, 2005[1]). However, a comparative analysis of these regimes is complicated by the fact that some of the observed measures are not viewed as agricultural concessions in some countries, as the same treatment is available for non-farm households.
Answer:
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Explanation:
(1) Raising the Marketable Surplus:
In the words of Prof. Kaldor. The taxation to agriculture has a critical role to play in the acceleration of economic, development since it is only the imposition of compulsory levies in the agricultural sector itself which enlarge the supply of savings for economic development.
It is a great economic fact that during process of growth, agriculture has to supply the rest of economy with larger food surplus and raw materials. Production and marketable surplus have to increase to meet the needs of non-agricultural sector and also to occupy an increasing proportion of the economy’s man power. It is thus clear that an increase in agricultural taxation is recommended and sought to be justified on the ground of raising marketable surplus from agricultural sector.
(2) Mobilisation of increasing Volume of Domestic Resources:
ADVERTISEMENTS:
Our 5 year Plans necessitate mobilisation of increasing volumes of domestic resources. Our plans have always suffered on account of paucity of domestic resources.
One of the reasons for the failure of the Govt. of raise adequate domestic resources is that it has not effectively tapped sayings in agriculture. It is argued that while the Govt. has been inventing increasingly larger amounts in agriculture, it has not made a parallel effort to tax away a substantial portion of the increase in the income of the farmer.
(3) To Look for New Taxes:
The dimensions of present taxation have been rising continuously. The urban sector has to surrender a major portion of their earning to Govt. in term of taxes. This process seems to have reached a stage-where it is becoming self-defeating. Therefore, it is a must to look for new taxes in the agricultural sector.
(4) Earning of the Farmers have gone up Tremendously:
As a consequence of large-scale public investments made- in agricultural sector, the earnings of the tillers have gone up tremendously, our subsistence agriculture is getting the shape of commercial farming. In the present circumstances the traditional agricultural taxation has become outmoded and a system of progressive taxation of farm income should be evolved.
(5) Rectification Regressive Character of our Tax System:
ADVERTISEMENTS:
It will rectify to some extent the regressive character of our tax system. It will equalize burden of taxation between agriculturists and non-agriculturist on one hand and landlords and cultivators on the other. It will tax non-agricultural income of a landlord at a higher rate.
(6) Contribution by Agriculture:
The direct taxes on agriculture i.e. land revenue and agricultural income tax have remained static since 1950-51 below 2% of income from agriculture. Agriculture has thus not contributed anything for economic development, even though the crude index of economic welfare of the fanning sector has been increasing.
(7) Concentration of Land in a Few Hands:
In India there is a concentration of land in a few hands and this concentration has increased in recent years. About 50% of land holders men own only 6% of land; less then 05% of land owners own more than 11% of land.
The richer sections of the farmers bear low burden because they pay land tax which is proportional tax and they may or may not pay agricultural income tax. Thus richer sections of the fanners should.be made to bear a reasonable tax burden through levying additional agricultural
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