Taxing retailers

Retailers and traders have finally been roped into the tax net. The new policy, however, has many loopholes and it is bound to be exploited by the small-scale business class, as this segment of economic activity was widely tabooed as untouchables. But the point is that the government had the audacity to zoom in on small traders, but at the same time many big businesses, especially the real estate, are still in a pampered zone, putting at stake the credibility and competence of revenue generation. The new income tax scheme is supposed to bag another Rs50 billion from public pockets, and will surely have its trickle-down effect on common consumers.

Apparently part of the dictates from the IMF, as a precondition to its $7 billion package, the taxation spree is in full swing. Though traders were off the hook to this day, primarily owing to their lobbying in political circles and pressure tactics, the amount of tax they will now be paying is nowhere near the volume of burden shared by the salaried class who are taxed 45% at source in the top most slab. The scheme is yet to spell out what is the ratio of taxation, depending on the size of retail outlets, but has made certain exemptions under pressure. The tax will be applicable to dealers, distributors, retailers, manufacturer-cum-retailers, importer-cum-retailers, or any person involved in the supply chain of goods in 42 cities across the country.

Statistics are quite blurry as to how many total number of retailers and traders are there in the country, and at the same time how to evaluate their volume of sales for taxation. The established norm is one of receipt-free sales, and secondly there are millions of traders who operate from symbolic small setups but have a roaring revenue output. The FBR says 150,000 traders are registered, and a lot more is yet to be done. Exemptions to shops in residential areas measuring up to 100 square feet and those who are already registered filers, as well as kiosks and makeshift businesses with Rs100 fixed tax per month will solicit a good amount of data-enlisting.