Pakistan is fast-tracked to secure an extended fund facility worth $6 billion from the International Monetary Fund. Not just that, a smart and timely effort is also underway for the lesser-known Cli­mate Resilience Facility (CRF). Under the toughest economic circum­stances and limited choices, the road to the IMF is certainly not ideal, but it is a decision that brings respite, restores part of economic sta­bility, and waivers the immediate threat of the worst outcomes for the country economically. The current government took up the task with utmost seriousness, and here we are, almost done with the require­ments of the IMF to secure the funds we desperately need.

Where many requirements have reflected in the new budget, most of them concerning the tax regime, one prerequisite is about aligning the pro­vincial agricultural taxes with the percentage set by the center. This should immediately draw our attention for several reasons. One, agriculture is the most revenue-generating sector of Pakistan’s indigenous produce econo­my. Second, the two most significant provinces where agriculture is the leading sector, Sindh and Punjab, have exemptions in place for the agri-economy. This paper earlier proposed that the Punjab government could also consider bringing the agriculture sector into the tax net when the province adopted its new budget. It seems that suggestion is now a ne­cessity, and provinces have given a nod to it. Good that the internal admin­istrative work between the center and the provinces is done, and all gov­ernments seem to be on the same page. But are farmers and commercial agriculturalists on board as well? Aligning tax with the center means a sig­nificant increase in the current rate set by provinces and an end to exemp­tions in place. For example, Punjab and Sindh give a tax waiver on annu­al farm income up to Rs 1.2 million, which now will change to Rs 600,000.

Sindh has a minimum tax rate of 15% on agriculture income, which now will have to be raised to either 35% or the newly set 45% by the center. This is a huge overnight change, which will likely raise many eyebrows, and people involved in agriculture will resist the step. Has the government thought it through? We will find out soon.