Govt caves in to traders' demand, withdraws fixed tax regime

• Finance Minister Miftah Ismail, Power Minister Khurrum Dastagir announce withdrawal of tax after holding talks with traders' bodies.
• Power Minister says system, which was being used in last fiscal year, will remain in place for the next three months. 
• Says they will sit again with the representative bodies of traders to see if system can be improved.

ISLAMABAD: Finance Minister Miftah Ismail announced on Thursday that the government has agreed to the demands of the traders’ bodies and withdrawn the fixed tax regime for this fiscal year 2022-23.

“As per all trader bodies demands and instructions from leadership, [Power Minister] Khurrum Dastagir Khan and I sat today and we have deiced that fixed tax regime has been withdrawn for this year,” said the finance minister in a video statement posted on his ministry’s Twitter account.

Dastagir said that the system, which was being used in the last fiscal year 2021-22, will remain in place for the next three months, adding that they will sit again with the representative bodies of traders to see if it can be improved.

Miftah shares plan to satisfy retailers' resistance 

Last week, after facing opposition from traders related to the collection of taxes via electricity bills and requests from Prime Minister Shehbaz Sharif and PML-N Vice President Maryam Nawaz Sharif, Finance Minister Miftah Ismail announced certain measures to satisfy small retailers.

“The prime minister has also called me and instructed me to ensure that small traders are completely satisfied with the new tax law. This I shall do tomorrow,” tweeted the minister. 

The finance minister said that to address the concerns of the small retailers the government will “exempt shops with bills of less than 150 units” from the tax.

“We will charge Rs3,000 even to those shopkeepers who are not registered with the Federal Board of Revenue (FBR). The tax paid will be full and final. No tax notice will be issued to shops nor will FBR officers visit their shops,” tweeted the finance minister.

Ismail was responding to a tweet by Maryam Sharif who had asked him to “withdraw tax on electricity bill” as the businessmen were worried and complaining.

Soon after the tweet, Maryam said that she had spoken to the finance minister who had assured him that he would sit with the traders tomorrow (Monday) and find a solution.

Small retailers to be taxed via electricity bills

The government in the budget for the current fiscal year had decided to deduct tax through electricity bills from small shopkeepers or retailers across the country to bring the sector under the tax net.

The budget document showed that fixed income and sales tax regimes of Rs3,000 to Rs10,000 has been imposed on the small retailers to bring them into the tax net.

However, traders across the country have staged protests and refused to pay the tax.

Last month, the All Pakistan Anjuman Tajran and Traders Action Committee Islamabad rejected fixed sales tax on electricity bills and demanded its withdrawal.

Ajmal Baloch, the president of the All Pakistan Anjuman Tajran and Traders Action Committee, Islamabad, in a press conference on Thursday, along with officials from all markets in the federal capital, demanded removal of Ismail and said: "No electricity bills containing fixed sales tax would be paid, and if Wapda or any power supply company tried to remove the electricity meter, traders would launch a protest movement."

He said in the budget document, that the income tax for non-filers was to be applied from Rs3,000 to Rs10,000 per annum, while in the Statutory Regulatory Orders (SROs), it was made monthly instead of annual, which was a bad thing on the part of the finance minister.

Baloch said Ismail "lied on the floor of the assembly for which he should not only be removed from office but banned".