A recent fiscal projection from the Sindh government reveals a significant and long-standing imbalance in its tax collection, showing that revenue from motor vehicle registration fees is set to more than double that collected from the province’s vast agriculture sector in the outgoing fiscal year ending June 30, 2025.

According to budget documents, Sindh anticipates collecting Rs9.35 billion from vehicle registration fees, a stark contrast to the Rs4 billion projected from income tax on the agricultural sector. This disparity underscores a wealth imbalance where individuals in the middle and upper agriculture income brackets and the rural elite appear to spend considerably on their lifestyle, evidenced by vehicle purchases, yet their tax contributions remain surprisingly low.

This situation consequently places a climbing tax burden on the tax-compliant industrial and services sectors, as well as on individuals earning salaries from non-agricultural fields. Despite motor vehicle registration fees being charged at lower rates, ranging from 1% to 5% of a vehicle’s value, they contribute significantly more. In stark contrast, agricultural income is subject to substantially higher tax rates, from 15% to 45% (effective January 1, 2025), with a super tax of 1% to 10% on high agricultural incomes, and corporate farming is taxed between 20% and 29%.

Despite these higher rates, agriculturists continue to be minimal contributors to provincial tax revenues. Agriculture remains a crucial income source for nearly half of Sindh’s rural population, encompassing poor farmers, landlords, and large-scale agricultural businesses, including livestock. Auto analysts estimate that a significant portion of total vehicle sales nationwide, including in rural Sindh, are driven by the agricultural community, particularly during crop harvesting seasons and around Eid-ul-Adha.

As new cars fill garages in rural Sindh, the province’s fiscal data tells a deeper story of visible wealth that isn’t proportionally reflected in the tax rolls. While agriculture contributes approximately 23.54% to Pakistan’s GDP in FY25, its share in tax revenue remains around 1%. Although the agriculture income tax is a provincial subject and provincial governments have legislated to increase collections, the Sindh government’s target of Rs8 billion for FY26 still falls short of vehicle registration fee projections. Concerns have also been raised that new agricultural taxes may lead to higher produce prices as the cost is passed on to consumers.