A LAND-BASED AGRICULTURAL PRESUMPTIVE TAX DESIGNED FOR LEVY BY PANCHAYATS

With economic reform and the dismantling of the structure of implicit taxation of agriculture through imported-protected industrialisation, accompanied by partially-compensating. input subsidies, the case for a n explicit tax on agriculture resurfaces with, however, a new emphasis on retention within the sector of resources so raised fbr infrastruct ure development and productivity-enhancing land improvements. This pap er designs a crop-specific presumptive levy to supplement the land rev enue, and presents the results bf afield survey in northern Karnataka covering three crops as a prototype of the kind of exercise necessary. The survey confirms prior expectations of wide disparities in returns between crops and justifies the crop-specific approach recommended. T he flat rate options to the agricultural income tax on plantations alr eady on offer in same states suggest that a more widely-based presumpt ive scheme for taxation of profitable crops will prove acceptable. The re cannot De any national uniformity in the crops chosen for taxation nor indeed should such uniformity be sought. There is a fortunate conv ergence between the requirement of stable norms for presumptive purpos es; and the requirement of a taxable threshold for exemption of crop f ailure, whether idiosyncratic or non-idiosyncratic. For reasons having to do with information availability, and amenability to jurisdictiona l demarcation, it is recommended that powers of levy of both the crop- specific supplementary and the basic land revenue be decentralised to the panchayat level of government. Unless a beginning is made in a seq uential crop-specific manner towards the tapping of agricultural surpl uses for the local financing of agricultural infrastructure, any impro vement in rural levels of living will remain dependent on uncertain tr ansfers from higher levels of government, themselves constrained by th e compliance crisis in the country.