Withdrawal of fixed tax

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THE government on Thursday withdrew the fixed tax for retailers and shopkeepers imposed through electricity bills for a year.

Federal Minister for Finance Miftah Ismail and Minister for Energy Khurram Dastgir made the announcement to this effect after holding parleys with the leaders of the business community.

They said the previous taxation system would continue for three months and then the Government would sit with traders to devise a feasible system.

The retreat of the Government is yet another indication that the powerful business community was not willing to contribute its share to the national kitty.

This is because a majority of the businessmen are not filers and pay zero tax to the Government despite earning millions in a month.

Many of them are minting money but do not want to come into the tax net and instead want the government to subsidize their businesses through different schemes and incentives.

Currently, the formal economy in Pakistan is overtaxed and the informal economy is under-taxed and according to a conservative estimate the income tax base of the informal economy is around Rs.50 trillion.

Pakistan would not need to spread a begging bowl before bilateral and multilateral donors if members of the business community pay their taxes honestly.

It is, however, regrettable that they opposed tooth and nail the effort of the present Government to collect just Rs.30 billion from them during the whole year.

The Government is politically weak because of a multitude of factors that cause instability and it was not expected to assert fully when a general election could be held this year or in any case next year.

Therefore, it succumbed to the pressure of the business community and deferred the imposition of fixed tax for one year.

It is ironic that those who are earning hugely are not ready to pay tax and now the budgeted amount of Rs.30 billion would be recovered from other segments of the society that are already overburdened by direct and indirect taxes. A wrong message has gone to honest taxpayers.

 

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