EDITORIAL: Finance Minister Muhammad Aurangzeb would do well to listen to the Polypropylene Woven Sack Manufacturers Association (PWSMA), whose call for mandatory printing of QR codes on plastic bags used by various manufacturing sectors is very much in line with his own vision of end-to-end digitisation of the tax system to eliminate leakages.
The Association has blamed the FBR (Federal Board of Revenue) for billions of rupees in annual tax evasion by major commodity producers due to malfunctioning of its once hyped track-and-trace system.
PWSMA’s claim, that the proposed system will eliminate high-level illicit trade, which eats up a good 20 percent of Pakistan’s formal economy due to high taxes, ineffective enforcement, and poor documentation, is in itself worth looking into. Especially since it is about time somebody did something about the cash economy that thrives at the cost of billions in tax earnings and undermines the formal tax paying sector.
It’s a shame that the FBR has singularly refused to lean towards effective digitisation once its track-and-trace system failed. It must explain why it ignored PWSMA’s pleas and opted for imported QR-code printed paper stamps for some industries under that track-and-trace system.
It says a lot that plastic bag manufacturers first proposed printing QR-codes on polypropylene bags in 2020, but nobody paid any attention despite the desperate need to digitise the tax collection machinery and IMF’s repeated demands.
It is unforgivable that authorities just watched and did nothing even as FBR’s decision to allow manual QR-code paper stamp affixation encouraged widespread counterfeiting.
Now, the Association’s request for adoption of mandatory printing of QR-codes on polypropylene bags produced for all sectors – sugar, cement, fertiliser, feed, wheat, rice, chemicals – must be taken very seriously.
This is important not just to promote transparency and efficiency, but also to initiate tax reforms that will enable the government to squeeze more fiscal space out of IMF’s “upfront conditions” as it negotiates the next EFF (Extended Fund Facility) starting April.
This will also be a good early test for the new finance minister as the market watches how he realises his vision of greater visibility and more digitisation of the economy, especially the FBR.
The tax collector is notorious for its resistance to change, after all, having botched up its track-and-trace initiative and resisted all attempts at meaningful reforms. And there’s no doubt that he will face spirited resistance at every stage as he tries to break the government machinery out of its typical regressive, inefficient, bureaucratic approach to things.
The one thing he does not have is the luxury of time. Therefore, unlike his predecessors, he will have to hit the ground running. And PWSMA’s case looks as promising an omen as any, giving him at least one blueprint to pursue and implement without wasting any time; one that makes sense and is sure to lead to more transparency, less corruption, and greater tax revenue.
Copyright Business Recorder, 2024
Comments
Comments are closed.