This chapter examines relevant findings from the literature on taxation and agriculture, focusing on four areas: the impact of income tax on income levels and variability; the impact of property taxes on farm transfers and structural adjustment; the impact of taxation on investment and innovation; and the performance of tax instruments for improving environmental sustainability.

This chapter provides an overview of taxation in agriculture comparing general systems and special tax provisions for agriculture among 35 OECD countries and emerging economies. This cross-country comparison covers a wide range of tax areas: on income, profits and capital gains; on corporate income; on property; on goods and services and fuels; environmental taxes; and on incentives for research and development and innovation.

This chapter outlines the wide range of tax rates, as well as the diversity and frequency of concessions in agriculture found across the reviewed countries. It briefly discusses the likely effects of tax systems and concessions for agriculture on the performance of the sector. Finally, it points to the need to improve understanding of the direct and indirect effects of tax provisions on agriculture and to evaluate the impact of tax policy on agriculture on a more regular basis.