The Federal Board of Revenue has made a major change in the Tajir Dost scheme, and has decided to end its registration of all traders, focusing on wholesale and posh markets. This actually makes a certain amount of sense, allowing an optimized application of resources. It raises the question of why this approach was not made in the first place, or is it that the naysayers and the pessimists had called for a general scaring of all traders in all markets all over the country, so that the International Monetary Fund could be satisfied that the FBR was making every effort to extract every last bit of revenue so that it could meet its targets.
It is perhaps of some significance that the CBR has missed it revenue target of late, and is behind on the fiscal year, someone must have realised that unless the CBR does something different it will not be able to meet those targets.
The CBR intends to use the data that will accrue for further tax collection. This will work best for wholesale traders, who will have to provide information about whom they sold their goods to. The taxmen will be able to check whether the buyer paid general sales tax, and what he did with the goods, Presumably, any goods not in store would have been sold. Was GST paid? Posh markets should also be covered. All shopkeepers there should be filing both income tax and GST returns. However, there is a problem. Detecting non-filers has been the duty of the CBR even before Pakistan came into existence. It has refrained, not because of laziness or incompetence, or because of any sympathy for the potential taxpayer, but for a straightforward consideration. CBR officials have here potentially given shopkeepers an out, and will miraculously miss seeing them when they go for inspection.
The political masters of the CBR must be wary of this. They will have to be particularly wary, because the shopkeepers most affected are likely to have been age-old supporters, who have looked to the ruling PML(N) to safeguard their interests, in which evading registration, let alone paying any tax, takes pride of place. The motivation might indeed be pressure from the IMF to meet the revenue collection target, but the government must not forget that traders’ tax evasion has come at the cost of the salaried class, which the CBR has squeezed as if by reflex whenever pressure has come from above.
