THE government’s announcement to impose an indicative income-based tax on retailers to bring the sector into the tax net is a commendable step in the right direction. The proposal, shared with the International Monetary Fund (IMF), targets an increased contribution from retailers, ranging from Rs 100 billion to Rs 200 billion per annum, with implementation slated for January next year.
However, historical patterns suggest that retailers have been quick to scuttle previous attempts at taxation, often resorting to protests and shutter down strikes. It is imperative that the government remains resolute in the face of potential resistance, as the stakes are high. The retail market, constituting a staggering 18% of the GDP, has long evaded its proportional contribution to the national exchequer, standing at a mere 1%. This glaring imbalance underscores the necessity of bringing retailers into the tax net. The key lies in digitizing transactions and closely monitoring buying and selling activities in the retail sector. The proposed income-based tax could be a catalyst for a much-needed paradigm shift in the government’s approach to tax evasion. It is crucial for the government not to succumb to pressure, as has been witnessed in the past. Firm action taken against smuggling and hoarding should be extended to curb tax evasion across various sectors, including retail, real estate and commodities like tea and tobacco. Upholding the rule of law and ensuring a fair and transparent tax system will go a long way in bolstering Pakistan’s economic stability. The significance of this step cannot be overstated as it will play a pivotal role in financing development projects and providing essential amenities to the people. By broadening the tax base, the government can reduce its reliance on loans, fostering fiscal independence and sustainability. The path ahead may be challenging but the authorities must stand firm against any resistance, ensuring that all the potential sectors contribute their fair share to the nation’s economic well-being. As a nation it is also for us to honestly pay our taxes in order to take the country towards self-reliance.
