The farming community in Pakistan has voiced strong opposition to the Federal Board of Revenue’s (FBR) proposal to increase the sales tax on tractors from 10 to 18 percent, warning that such a move could have disastrous consequences for the agricultural sector.

In a letter addressed to the FBR Chairman, Nabi Bux Sathio, Senior Vice President of the Sindh Chamber of Agriculture, highlighted the urgent need to rationalize the tax structure and eliminate the sales tax on tractors to support the struggling agriculture industry.

The Sindh Chamber of Agriculture has outlined the negative impact of the proposed tax increase on farmers, emphasizing the need for a comprehensive tax rationalization package. This package includes reducing import duties and sales tax on imported tractors and maintaining or lowering the current sales tax rate on locally manufactured tractors.

Representing the agricultural community in Sindh, the Chamber has expressed deep concern over the significant challenges faced by farmers, including inadequate investment, climate change effects, and water scarcity. These issues are compounded by the inability to secure fair prices for produce, with government support prices for wheat and cotton not translating into actual purchases at the announced rates. Additionally, low prices for rice and potential delays in the sugar cane crushing season have further exacerbated the situation.

The proposed increase in sales tax on locally manufactured tractors adds to the burden on farmers, who are already struggling to access essential agricultural machinery due to a gap between availability and required horsepower per acre.

To address these pressing issues, the Sindh Chamber of Agriculture has recommended the following measures to the FBR Chairman:

Maintain or reduce the sales tax rate on locally manufactured tractors from 10 percent to 5 percent.
Reduce the customs duty on imported tractors from 15 percent to 5 percent.
Lower the sales tax on imported tractors from 10 percent to 5 percent and eliminate the additional 3 percent advance sales tax on imports.
Implementing these recommendations would provide immediate relief to farmers and catalyze the revitalizing Pakistan’s agricultural sector. By supporting this vital part of the economy, the nation can work towards a prosperous and self-reliant future.

The Sindh Chamber of Agriculture remains hopeful that the FBR will prioritize these crucial reforms and support the farming community during this challenging time, ensuring the livelihoods of millions and bolstering national growth.