AS was widely apprehended, the trading community has once again defeated the objective of documentation and expansion of the tax net by practically rejecting the new fixed tax scheme, which was devised in consultation with their representatives and envisaged payment of a token tax of 1% of their annual turnover. During a briefing to the Senate Standing Committee on Finance, Minister of State for Finance Bilal Azhar Kayani and FBR Chairman Rashid Mahmood Langrial expressed frustration over the poor response of the business community and vowed to go for strong enforcement measures.
It is unfortunate that a segment of the society with huge income is not willing to pay taxes and as a result the axe falls on the honest tax payers. The FBR deserves credit for exceeding the tax collection target for the first quarter of the ongoing fiscal year by Rs. 13 billion despite sluggish economic activity but this was due to cooperation of the compliant sections of the society. The Government had launched the 1% fixed tax scheme, offering retailers to pay a nominal tax in return for complete exemption from audit and installation of Point of Sales (PoS). It replaced the previous Tajir Dost Scheme (which failed to make an impact) to improve documentation and make tax compliance easier. It was maximum a Government could have offered to those who are, otherwise, minting money but shamefully, 787 tax returns had been filed under the new scheme, of which only four were new filers. This state of affairs is unacceptable as the defiance means challenging the writ of the State but it is all the more regrettable that the authorities are unable to take any punitive action because of the pressure tactics of this powerful community. A crackdown is a must as inaction would send wrong signals to existing tax payers.
