THE traders and the government signed an 11-point accord on Wednesday after which the former announced to end their country-wide shutter down. This apparently brings relief to the government which was under pressure because of the Azadi March of JUI(F) and the accord is widely being interpreted as the first casualty of the political instability.
The negotiated solution of the issues between the FBR and the business community is, of course, a welcome development and amicable settlement of the differences would help restore normal business activities in the country. However, it is lamentable that once again the dream of the authorities to move towards documentation of the economy has been shattered under pressure and blackmailing tactics. The government has taken a U-turn on the issue of documentation of the economy and brining all taxable sectors under the tax net. The agreement with traders shows the government has succumbed to {undue} pressure and allowed sweeping concessions to traders including relaxation in registration requirements, reduction of income tax rate by 66% and postponement of the CNIC condition till 31 January 2020. The staggering increase in the turn over limit and covered area of shops is a virtual license to thousands of traders to continue to go scot-free and avoid paying due taxes despite earning millions in a year. Similarly, increase in the limit of electricity bill of business premises from the existing Rs 600,000 to 1.2 million would mean exemption from tax net to many more. The condition that the issue of exemption of shops from sales tax registration on the basis of covered area and turn over would be decided in consultation with a Committee of Traders is also another loophole that could be misused to the disadvantage of the national kitty. Earlier, the government had taken a principled stand that all citizens should pay according to their income but with this agreement a departure has been made by giving undue relief to those who are earning hugely but contributing negligibly to the national exchequer. This also factually means that the government would continue the past practice of putting more burden on those who are already paying their taxes honestly and hopes for widening of tax base have dashed for now.
