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Abstract

Economists have rarely considered the implications of taxation systems for the agricultural sector. Management specialists and accountants have usually approached the issue from the perspective of how farmers and landowners can avoid it. Little has been written on the extent to which the special treatments that agriculture commonly receives in national tax systems impact on the sector and its performance. This paper considers these broader issues and builds on an inventory of tax treatments compiled for the OECD by one of the authors. Tax concessions can act as forms of support to incomes and wealth accumulation, though the identification and quantification of this support present fundamental conceptual difficulties and practical problems. Taxes are often advocated as instruments of environmental policy, and these may have income implications. Concessions given by capital taxes, in particular, constrain structural adjustment. Differential tax treatments can also impact on patterns of international trade by distorting comparative advantage, as perceived by farm operators. Some of these effects are of major importance to agricultural adjustment and to policy. This paper examines the main issues involved in achieving a more adequate understanding of the tax treatments applied to agriculture.

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