ISLAMABAD: The government’s much-touted tax reform is likely to face substantial resistance as the traders’ community has announced a nationwide strike on Wednesday (today), with partial support from a few political parties and trade associations.

Prior to the strike call, traders’ representatives visited the Federal Board of Revenue’s headquarters on Tuesday to express their discontent to FBR Chairman Rashid Mahmood and his team regarding the Tajir Dost Scheme, which was implemented in April, and the recently notified tax rates that took effect in August.

The expansion of the country’s tax base will now pose a significant challenge for the PML-N and its coalition partner, the PPP, as the protesting traders have political affiliations with these parties. Nevertheless, opposition parties — JUI-F, Jamaat-i-Islami and Awami National Party — have declared their support for the agitating traders.

Mr Mahmood told Dawn that the FBR is willing to resolve ‘legitimate issues’ raised during the meeting. “We are ready to make amendments to the SRO to address their concerns,” he said.

However, he emphasised that the FBR will not withdraw the Tajir Dost Scheme, which aims to bring the retail sector under the tax net.

FBR refuses to withdraw Tajir Dost Scheme aimed at bringing retail sector under the tax net

According to him, the retail sector, which contributes 20 per cent to the GDP, remains largely untaxed. Similarly, agriculture, also accounting for 20pc of GDP, is managed by the provinces, as are services. “We have no choice but to bring the retail sector under the tax net,” he said.

The FBR chief hinted at setting up a market-level review mechanism with representation from tax officers and traders to ensure that no shopkeepers face unfair tax rates. “We can rectify such issues by making amendments to the SRO.”

The SRO 457 of 2024 was issued on March 31 to notify special procedures for Tajir Dost Scheme. Another SRO1064 of 2024 was issued on July 22 to notify area-wise monthly advance tax specified for traders.

Under the scheme, tax rates will be collected from shopkeepers in 42 cities across the country at a fixed rate of Rs100 to Rs20,000 per month, based on the fair market value of their stores.

KCCI’s appeal

Meanwhile, Iftikhar Ahmed Sheikh, president of the Karachi Chamber of Commerce and Industry (KCCI), has urged all its members to fully support Wednesday’s countrywide strike by closing their businesses, aiming to pressure the government into withdrawing the Tajir Dost Scheme and reducing high electricity bills and other taxes.

He demanded the withdrawal of the scheme and the notices issued to registered and unregistered traders/shopkeepers, which demand an advance tax of Rs60,000 per month.

Muhammad Kamran Arbi, president of the SITE Association of Industry, has also extended firm support to the traders’ strike. The Korangi Association of Trade and Industry has also announced its support for the strike, with its president Johar Qandhari urging the government to promptly address the demands of the business community.

Addressing a press conference at the National Press Club, Kashif Chaudhry, president of the Central Association of Tajran Pakistan, announced that the business community will observe a complete shutdown as a public referendum against the government’s decision.

Published in Dawn, August 28th, 2024