A debate has been sparked following news that farmers were taxed this year for their cardamom sales.
On the one hand, the Income Tax Act 2001 requires that income from cash crops like apples, oranges and cardamom is taxed, along with other crops the government chooses. However, while apples and oranges, along with other fruits and vegetables have been taxed, cardamom has not been so far given its low market value. The government’s decision to tax those cultivating cardamom is a result of its higher market value and more farmers turning towards an apparently more lucrative cash crop in the past year.
On the other hand, we’re aware that rural-urban migration is a growing problem. Youth are leaving the villages in search of jobs in the towns. As a result, it is mostly the elderly left behind in the villages. Given the challenges: a changing climate causing more natural disasters, human-wildlife conflict, harvest and market unpredictability, and the demanding physical nature of farming, more land is being left fallow.
Efforts are being made to reverse this situation by attempting to provide farm mechanisation services, farm roads, electric fencing, green houses, better access to markets, compensation for crop loss, and low interest loans, among others.
But the question still remains if taxing our farmers tips the balance the wrong way.
By law, all income exceeding the exempted limit of Nu 200,000 is taxable. As citizens of this great nation that provides us with free education and health care, among others, it is our responsibility to ensure we declare our income truthfully and pay our taxes.
However, there may be a need for the government to reconsider its policy towards farmers given the circumstances.
For instance, it is a fact that more farmers have turned to cardamom and that they fetched high prices last year. But there are also reports that the price of cardamom has declined by almost half this year. The market situation of the crop has also apparently changed with supply vastly exceeding demand.
What is clear is that cardamom is not a reliable source of income. Lives will be affected this year and a tax on top of it may only add to their problems.
The Income Tax Act says that income from cash crops will be taxed on an accrual basis. The government could consider at least deferring the year from when it begins taxing cardamom.
Perhaps, an amendment to the Act is also due to allow the government more leeway in how it taxes farmers. Any loss in revenue could possibly be compensated by strengthening the way businesses, especially big businesses, are assessed to prevent leakage.
The agricultural sector has been and continues to be the foundation of this country. Recognising this, the government announced on the Birth Anniversary of His Majesty The King yesterday that the Rural Enterprise Development Corporation Ltd loan ceiling for farmers has been increased from Nu 100,000 to Nu 500,000.
The way forward is to keep money in the pockets of our farmers until the conditions for the farmer improves.