A Study of Implicit Tax in Pakistan’s Agriculture, with Special Reference to the Case of Rice

Mohammad Aslam

Abstract

The study examined ‘implicit tax’ argument of the agriculturists’ lobby to oppose imposition of an agricultural income tax. The paper discovered a widening gap between procurement and export prices of both Basmati and IRRI. The gap between procurement and consumer prices of the two varieties also widened significantly. Thus while both producers and consumers remained on the losing end, first government and then after the policy reforms the exporters and other intermediaries, were the substantial gainers. Since RECP has been disbanded and the Government has opted out of purchase and export of rice, the margin now goes to the exporters instead of the Government. Under the changed rice policy, the ‘implicit’ tax argument has therefore lost much of weight and relevance.