Big test for government

Past govts failed to properly assess tax liability of businessmen and traders

Divided are businessmen and traders on how to tackle the government’s drive to document commercial activity in the country.

Some of the merchants believe in pressuring the government through strikes and lockdowns into accepting their demands that range from an increase in the bracket of taxable income to the mandatory procurement of CNICs from customers conducting transactions worth Rs5 million or above.

There are others who want their grievances resolved through talks with the government. Which side weights heavier is not yet clear, though.

A countrywide strike yesterday did clear the picture to the extent that while a number of traders’ associations across the country strongly supported the strike call, the main chambers of commerce and industry, from Karachi to Lahore and other cities of Punjab, remained indifferent.

This division does appear in favour of the government which has to ensure Rs5,555 billion tax collection during the ongoing fiscal year, meaning a challenging Rs462.9 billion every month and Rs1,388 every quarter.

But there is a genuine concern too: a cash-strapped government does not have the cushion to fall back on in case of a sustained resistance even from some groups of traders, even though there can be no arguing the government’s right to go tough to collect taxes from the millions of traders who have so far remained out of the tax net.

The government, therefore, does run the risk of falling short of the quarterly revenue collection target; and in such an event the only quick fix would be to raise power and gas tariffs as well as fuel prices — something that the already hard-up masses can no more bear with.

This indeed is a big test for the government of Imran Khan, given that the past governments, including that of Pervez Musharraf, have failed to properly assess the tax liability of businessmen and traders and make them a part of the country’s tax-paying population.

Published in The Express Tribune, July 14^th, 2019.

Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.