Key Details
The IMF paper Global Taxation of Agriculture and Forestry brings domestic tax concessions — often less visible than subsidies — into the assessment of agricultural support.
Area | Key Finding |
Study Coverage | Examines 944 agriculture- and forestry-specific tax measures across 89 countries, reflecting provisions applicable in 2024–25. |
Tax Concessions Dominate | More than 87% of identified measures reduce taxes, compared with approximately 11% that increase them. |
Main Tax Instruments | Corporate income tax accounts for 266 measures, followed by VAT/GST (222), personal income tax (136) and property taxes (122). |
Estimated Fiscal Cost | Agricultural tax concessions represent approximately 0.7–1.6% of GDP globally, potentially exceeding direct agricultural subsidies. |
Income Differences | Estimated forgone revenue is highest in low-income developing countries, at approximately 1.75–4.5% of GDP, compared with around 0.25% in advanced economies. |
Trade Policy | Countries generally impose above-average tariffs on imported food but lower tariffs on agricultural inputs. |
Environmental Taxation | Only 58 measures, approximately 6% of the database, have a clearly positive environmental impact. |
The estimates are illustrative forgone revenue, not money governments could automatically collect by withdrawing concessions. They use broad national-accounts measures rather than taxpayer-level data and may overstate the taxable income or sales involved.
Tax Concessions Are a Major Form of Farm Support
The paper’s Agriculture and Forestry Tax Database records preferential treatment under income taxes, value-added or general sales taxes, property taxes and excises. Concessions outnumber sector-specific tax increases by almost nine to one.
Using the database to estimate forgone revenue, the authors find the largest amounts relative to GDP in low-income countries, where agriculture occupies a larger share of the economy. Their estimates suggest tax concessions may exceed direct agricultural subsidies in value. The comparison brings a less visible form of support into view, but its size depends heavily on how the taxable base is estimated.
Food Affordability and Import Protection Pull in Different Directions
Many countries reduce consumption taxes on food to make it more affordable. They also tend to charge higher tariffs on imported food than on imports generally, protecting domestic producers but potentially raising food prices. Agricultural inputs, by contrast, usually receive below-average import tariffs to contain production costs.
These measures serve different purposes and interact. The paper argues that assessing a food-tax concession or tariff in isolation can obscure its effect on consumers, farmers and public revenue.
India’s Farm-Income Exemption Features in the Global Study
India is included in the database. The paper cites India’s broad exemption for agricultural income as an example of a longstanding tax concession; it also notes a deduction for certain afforestation donations. It does not provide a separate estimate of India’s agricultural tax expenditure or assess the effects of these provisions on Indian farmers.
That distinction matters because the paper’s cross-country estimates are especially sensitive to informality and to how many farmers would otherwise fall below income-tax thresholds. An exemption does not necessarily represent revenue forgone from every farmer it covers.
What Is a Tax Expenditure?
A tax expenditure is support delivered through a tax concession—such as an exemption or reduced rate—instead of a budget payment. Its estimated cost is the revenue forgone relative to a specified standard tax treatment. Change that benchmark or the estimate of taxable activity, and the estimated cost can change.
Policy Relevance
For India, the paper points to a measurement question before a reform question. Agricultural support is spread across budget spending, tax provisions and trade policy. A fuller account would show who benefits from each measure, its estimated fiscal cost, and whether affordability or farm-income goals are being met.
The broad agricultural-income exemption is a particularly relevant subject for such assessment. The paper does not establish how much revenue India could raise by changing it, nor does it recommend a specific Indian tax change. Any India-specific conclusion would require administrative and distributional evidence that its cross-country method does not supply.
Follow the Full Paper Here: Global Taxation of Agriculture and Forestry, IMF Working Paper 2026/200