- Easing in reforms a better route to take
The PTI government’s tax reform initiatives have been largely unpopular across all industries as is the case with any exercise where new taxes are introduced, older ones increased and the tax collection body, the FBR, becomes overactive. Traders across the country are currently observing a two–day strike, protesting new measures by the government to broaden the tax base, which include compulsory sales tax registration, providing valid CNIC on buying and selling of goods worth over Rs50, 000 and a revised sales tax on mobile phones. Traders have actively avoided the tax net, keeping their dealings strictly in cash to either completely avoid or at least minimize their tax liability. The used car markets across the country have a similar set of grievances, protesting, as they are unable to import cars in the volumes they had gotten used to due to the government’s restrictions. In their case as well, advantage was being taken of a loophole in the used-car import policy. The government has to collect taxes to survive and meet the near impossible target of Rs5.5 trillion in this financial year. It is already lagging after missing the first quarter target by a whopping Rs116 billion. As the economy goes through a cripplingly low growth rate that is projected to remain low in the short to medium term, a higher cost of borrowing, rupee depreciation and record inflation; businesses are already having a tough time making ends meet. Add to that a new set of taxes and an overzealous documentation drive, and one can understand their frustrations. But it is also unfair to expect the salaried class and other taxpayers to fill the gap created by those who do not pay their fair share.
The government should therefore, instead of being so stringent in its implementation of the new policies, be a bit more forthcoming. Meeting with the various representative bodies to hash out genuine issues and arrive at a middle ground would be a good start. Fulfilling the promises made in any negotiations would be imperative. Short of this, such protests will continue unabated. The government must be more inventive in its approach towards disgruntled members of the business community.
