WHT saga — twist in the tale

One of the most important factors in negotiations is timing. The PIA-Palpa showdown was at its height during the time Hajj flights were to be operated. The agricultural package, subsequently put on hold by the election commission, was announced ahead of the local government elections. Now, we have the meetings between traders and the government over the withholding tax saga being held around the time of the NA-122 by-poll. Perhaps, there are certain elements within the government that want traders to go home happy close to the by-poll. In the latest development, the government has conceded that the tax levy, implemented through the budget, will now be cut down to 0.2 per cent. The levy was initially 0.6 per cent, before being slashed to half. Additionally, and this is the bigger concession, the minimum threshold for this levy to take effect has been increased to Rs100,000, which means any banking transaction below that amount will be exempted from the tax.

This arrangement will last till December 31. In the face of protests and concerns regarding protecting a sizeable vote bank, the government has backed down for now. What the authorities had originally been asking for was not unfair. They wanted traders to come into the tax net, file their returns and contribute more to national revenue than they currently do. But traders, already divided as to how much concessions they should demand, are reluctant to declare their assets and have become comfortably used to staying outside the tax net. They cite harassment by tax officials for their less-than-forthcoming nature. But filing tax returns is not a favour the traders would be extending — it’s legally binding on everyone making money on Pakistani soil, and making use of the country’s infrastructure to generate income. The reason why traders are divided is because they are unclear about what they really want and that is due to the unjust nature of their demands. For once, the finance minister’s measure has actually forced the public to file tax returns. Traders need to undertake this national duty as well.

Published in The Express Tribune, October 11^th, 2015.

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