Income from agriculture can be substantial if it is practiced with suitable inputs, scientifically. Therefore, farmers earning big from agriculture can afford to pay taxes and, according to some, should be taxed. Chief Economic Adviser Arvind Subramanian stated recently that the power to decide whether or not to tax farmers rests with state governments.
His statement followed clarification from Finance Minister Arun Jaitley that the Central government does not have the authority to tax agriculturists and that the Constitution does not allow it. It would be a difficult call also for states to take, for farmers big and small constitute a major share of voters in rural reaches of the country.
More importantly, in the absence of sound land reforms, shortage of water and capable and willing workforce (since there is very little mechanisation in most farmlands across India), non-availability of timely and dependable inputs, technical guidance and financial support and very little organised storage facilities, the bulk of farmers in this nation are a severely distraught class.
They have been forced to live in villages, which automatically deprives them of, first, standard medical facilities for their parents and themselves, second, normal education for their future generations and third, access to modern farm implements and research knowledge that help in greater and economically viable agricultural output.
The discussion in this country needs to change drastically. It hasn’t happened so far mostly because our politicians, intelligentsia which supports them, bureaucrats who form policies and our negligibly knowledgeable economists have virtually no ground connect.
The primary question that needs to be asked is what is tax? When people earn, the state demands that they pay a certain amount of their earnings as tax. This collected amount is supposedly to be spent for social development.
Taxation is not new to humanity. In earlier times, the kings used to collect tax in the form of produce also. In many instances, this was done forcibly and at times through violence and torture. Now in modern times, humanity which claims to have developed aesthetically has put tax laws which severely penalise the citizen if s/he is found to have evaded any government dues.
In many nations, both developing and developed, the state simply does not snatch away an individual’s earnings. The government also helps individuals who are aged, unemployed or ailing by putting in place a social security system that has the ability to help them financially.
Sadly, in India, tax collection has been always by threat. Whether it is the rulers of the past, the Moghuls or the British or our own legally elected democratic governments, all have resorted to forcing the public to pay taxes. Unfortunately, we as a society do not encourage entrepreneurship.
Individuals who earn by virtue of small innovations or micro enterprises, tend to avoid paying taxes because they see no fallback for themselves, their families or their employees. The salaried class is known to resort to help, at best, from their chartered accountants or at worst take bribes which do not show up in their legal earnings. Most government employees resort to this second option. Many Indian corporates pay their employees in cash to avoid taxation and yet retain the workforce.
Now to return to the issue of taxing agricultural income. This is a profession in which the producer is never certain of the outcome. In a world where the environment is changing fast, agriculture is the first casualty. When government officials have started talking about taxing the farmer, it may be clearly understood that this is the beginning of the process.
By bringing this issue to the discussion table, the intentions are clear and loud for anyone who cares to heed. It is these rich pro-corporate people who are hell bent on destroying the backbone of the farmer. When the farmer is frustrated and wants to opt out, the only alternative to earn money for that family is to sell the land that they possess.
That land to be sold, obviously, will not be purchased by the neighbouring farmer but by a large shark. This is precisely what the rulers of today desire. Unfortunately, the rich and famous who sit and sip their red wine and demand that agriculture be taxed, forget something very critical.
First of all, the agricultural produce is a social necessity that no living creature can possibly survive without. Food is of the highest importance. May it be grass for a deer or paddy for humans. Therefore, the produce of a farmer is sold and resold to very many consumers who have no idea who the agriculturist was.
It is very unlike Tata making salt, Jindal making steel or Reliance selling petroleum. When a society starts taxing agriculture, then the farmer tends to become dis-incentivised. Once the nation de-motivates the agriculturist, we go back to the 1950s India or the present day African nations where food shortage wipes out everyone.
Rather, tax collected from sales of food and agricultural produce must be ploughed back in the same field. And, no administrator should be allowed to create a situation where the farmer opts out of farming.
