Muhammad Saleem

The federal government will not be able to bring wholesale and retail sectors under the tax net without gaining the trust of the business community as transparency and accountability are key to helping foster public confidence in the country’s taxation system. Ijaz Ahmed, a trader of the Clock Tower Market, told WealthPK that he was willing to pay taxes if he saw that the collected money was spent on the wellbeing of citizens. “However, we observe that neither policymakers nor bureaucrats have curtailed their lavish expenses or adopted any austerity measures that could win public confidence in the taxation measures.” He said when politicians and public servants were not ready to cut back on their extravagant practices despite the fragile economic condition of the country, why the public should fund their lavish lifestyles. “The weak accountability system adds fuel to the fire as exploiters are thick-skinned and enjoy a lavish lifestyle funded by public money,” he added. In such circumstances, he said it was difficult for the business community to believe that their taxes would be used effectively and transparently.

“We are not intimidated by notices from the Federal Board of Revenue regarding their registration. We faced similar threats in the past. The current government’s approach mirrors past practices, which have historically led to resistance from traders,” he said. Chief Coordinator of the FBR’s Tajir Dost Scheme, Naeem Mir said that tax evasion by the business community needed to be curbed. However, he admitted that collecting taxes from traders was a challenge for the government. He noted that the business community had enjoyed unannounced amnesty for decades; but the government was now determined to crack down on tax evaders. “Globally governments enhance their fiscal resources through improved tax collections, but in Pakistan, expansion of the tax net is a daunting task. The business community must cooperate with the government in getting registered under the scheme to be honest taxpayers.” He said the Tajir Dost Scheme was aimed at bringing wholesalers and retailers into the tax net. He expressed concerns that the scheme was being politicised unnecessarily.

Dr Ashraf, a teacher at a state-run university, told WealthPK that the government had so far been unable to bring traders under the tax net. He said in most countries, registration was mandatory even for launching a small project; however, in Pakistan, the situation was quite different due to the ineffective approaches of government institutions. He said traders’ registration had been a longstanding issue, and till this day, both the bureaucracy and policymakers had failed to find a solution. “Tax evasion is rampant due to the undocumented economy and the non-registration of countless businesses,” Ashraf said, adding that lack of registration made it tough for FBR to keep any eye on the businesses sales and enforce tax compliance effectively. Ashraf pointed out that numerous businesses resorted to underreporting their sales or using fake invoices to hide their taxable income. “This practice is underway with the alleged connivance of FBR officials,” he said.

Credit: INP-WealthPk