Report No. 49
11A. Position under the proposal different from countries levying tax on agricultural income.-
The position under the proposal will be essentially different from the position that prevails in some countries (including a few federations),3 where agricultural income is brought within the direct purview of the law imposing a tax on income.4
For example, in Uruguay5 (which has a quasi-federal constitution), income is, for the purposes of the individual income-tax, classified in five categories, according to the "prevailing factor of production", and these categories are:-
I- "Real Estate Category" (income derived from the lease of real estate and similar situations).
II- "Chattel" (interest and other income derived from credits, intangible assets, royalties etc.).
III- "Industry and Commerce" (income from commercial and industrial activities).
IV- "Agriculture" (income from agricultural activities).
V- "Personal" (salaries and fees earned by employees, professional men, etc.).
The prevailing factor of production in categories I and II is capital; in category
V work; and in categories III and IV the union of both the elements.
Again for example, in Chile,6 income derived from real estate (urban or agricultural), investments (except dividends), commercial, industrial or similar activities, is taxed under the first category of income-tax.
1. Russell v. Queen, (1882) 7 App Cas 829 (838-40).
2. Other cases are reviewed by Bailey in 25 Australian Law Journal, p. 332.
3. (a) Tax on Trade Guide-Chile (Arthur Anderson & Co., Chicago, U.S.A.) (1966);
(b) Raynard M. Sommerfield Tax Reform and the Alliance of Progress (University of Texas Press, Austin);
(c) Highlights of Taxation in Mexico (Arthur Anderson & Co., Chicago) (1962).
4. See V.P. Gandhi Taxation of Agricultural Income under Central Income-tax, (January to March, 1969) 24 Indian Journal of Agricultural Economics 29, 36, 37, 38.
5. Costa & Rosello Taxation in Uruguay, (1968) 22 Bulletin of International Fiscal Documentation 291, 295.
6. Ehrique Piedra Taxation in Chile, (1968) 22 Bulletin of International Fiscal Documentation 319, 320.