EDITORIAL: The same old story plays out every time FBR (Federal Board of Revenue) gets serious about taxing traders. Pushed against the wall, they first threaten and then carry out protests and shutter-down strikes, bringing the whole country to a halt; and then the government relents and it’s back to business as usual – till next time.

This time, after FBR issued “hefty” tax notices to small businesses and retailers because very few traders voluntarily signed up for the Tajir Dost Scheme (TDS), chambers of commerce and traders’ bodies have issued their usual ultimatum, a call for a countrywide shutdown on Aug 28 “to protest against the TDS, rising power rates, agreements with IPPs, and imposition of different taxes”.

As the date neared the FBR finally deemed it fit to engage with the traders and has invited them for a meeting on the 27th of this month. The traders’ main objection seems to be the flat Rs60,000 per month rate that FBR has charged, more than the rate they are opposed to its nature as advance tax and not discharge of their tax liability. It is, no doubt, a hefty sum, considering that these people hardly paid any tax on their incomes.

But, still, it isn’t nearly as “hefty” as the taxes being squeezed out of the helpless salaried class, the middle- and lower-income groups.

In fact, the reason that the most vulnerable households and businesses are being so mercilessly taxed is that a few sectors, of whom traders are a big part, have used every trick in the book to stay out of the tax net so far, and the government has allowed them to, even when the economy is so close to breaking down in the fiscal sphere.

Now there’s no choice. It seems slowly but surely the government is beginning to realise, however late in the day, that the old way will just not work anymore.

And piling more tax misery on salaried groups, when historic inflation and unemployment have reduced their real incomes to a trickle, amounts to inviting the kind of social upheaval that the country might never have seen before. That’s why the old trick of traders throwing a tantrum and the government folding will have to become a thing of the past.

In fact, the state will not only have to put its foot down and extract due taxes from traders, but also go a step further and begin milking other protected, connected sectors like agriculture that never pay their fair share of taxes because of their presence in and closeness to parliament.

So far, the government has been behaving like it lives in a bubble, lavishing itself with perks and privileges just when the most severe austerity drive is rolled out for the common public. If this old habit does not change even now, then the people will only have their elected representatives to blame for the kind of collapse that will follow.

For, let it be very clear, the EFF (Extended Fund Facility) will snap the very month that the government is unable to keep up required revenue collection, and then there’s nothing saving the country from sovereign default and its own wider, deeper tremors.

The coming weeks and days will, therefore, be very instructive. If the same old script plays out, and traders are able to bully their way out of this tax drive also, then the average Pakistani will know his place very well in the bigger equation – that of the sacrificial lamb that is called upon whenever everyone higher on the food chain needs to be bailed out.

The joyride has run its course. Yet it’s still not clear if the government is well and truly aware of it.

Copyright Business Recorder, 2024