“Governor’s assurance is very encouraging for the seed industry in general and agriculture sector in particular”, President of Pakistan Hi-Tech Hybrid Seed Association (PHHSA) Shahzad Ali Malik said while speaking at a Press Conference at the Lahore Chamber of Commerce & Industry, along with LCCI Senior Vice President Mian Rehman Aziz Chan. It is pertinent to mention that a delegation of PHHSA a couple of days ago had meeting with the Governor Punjab Baligh Ur Rehman and informed him about the devastating effects of 17 percent sales tax on agricultural seeds. Shahzad Ali Malik said that the governor took a serious note of the issue and assured the delegation to take up the issue with the federal government for an early resolution. He said that agriculture together with agro-based products fetches around 80% of the country’s total exports earnings. Pakistan is in direct competition with the top agricultural produce exporting countries of the world and levy of sales tax on agricultural seeds will lower down national per acre yield and exports. They said that the government should rescind the amendments brought by the Finance (Supplementary) Act, 2022 in the larger economic interest of the overall economy of the country.
They said that since local supply of agricultural produce is currently exempt from sales tax under S.No.10 or Table-2 of the sixth schedule to the Sales Tax Act, 1990, producers of agricultural items will not be able to adjust input tax paid on agricultural seeds and the same will be passed through to the growers and consumers. According to the most conservative estimate, levy of sales tax on agricultural seeds will result in approximately 20% increase in the prices of all essential crops. They were of the view that this sales tax would force farmers and growers to use their own home grown low-quality farm saved seeds to save costs and yield will be low. Similarly, they said levy of sales tax is unlikely to have any meaningful impact on revenue collection as it will lead to growth of the informal sector which will result in an increase in the sale of undeclared, undocumented and untaxed seeds, and encourage unfair competition. They added that more than 42% of Pakistan’s labour force is engaged in the agricultural sector, levy of sales tax will reduce employment opportunities in the sector. While it may also have adverse impact on the prices of seeds and quality of agricultural produce which will jeopardize local R&D and production of Hi-tech Hybrid Seeds and severely impact the growth of Hi-Tech seeds, R&D and transfer of technology. They said that it would jeopardize envisioned investment opportunities in the agriculture sector and act as a disincentive for Chinese investors in relation to their planned investment in CPEC Phase-II having major focus on China Hybrid Agriculture Model and transfer of technology. Shahzad Ali Malik and Mian Rehman Aziz Chan said that Pakistan is an agrarian country and cannot afford to burden the agriculture sector. The government should not only withdraw 17 percent sales tax on agriculture seed but should also divise favorable policies.