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Lahore
Wednesday, August 10, 2022
EditorialTraders cry foul over "undue taxation"

Traders cry foul over “undue taxation”

Hefty electricity bills after the imposition of sales tax ranging from Rs. 3000-20,000 have shocked traders. Many among them, who owned small shops, were seen crying while holding their utility bills during interviews by local news channels. In our country, every trader is not a millionaire and the ones who are millionaires never bother to pay due taxes. Albeit, a perpetual system exists, where tax collection remains a challenging task for the government. It is very difficult to bring all traders into the tax net through a single policy. In fact, the government has taken a hasty decision of including sales tax in electricity bills, which already panic citizens due to numerous taxes, duties, surcharges and fuel price adjustments. As expected, now the government is facing backlash from traders and searching for a middle way to convince them to accept the new tax measure. Despite the government’s relaxation of exempting traders consuming electricity up to 150 units from sales tax, trader bodies have given a complete shutter down strike call for August 17 across the country. In fact, the government itself is responsible for the chaos. One thing is clear, the policy was imposed without proper deliberation and without keeping in view its consequences. The undue taxes are the result of poor policies of the government that has given certain guarantees of meeting revenue targets to the International Monetary Fund (IMF) and other financing institutions. In order to meet these ambitious targets, the government has introduced incremental indirect taxes.

The confrontation between traders and the government is bringing more chaos in the country and creating economic instability besides producing other negative results. Traders claim that the imposition of the sales tax on electricity bills is an undue taxation measure. Thus, resentment is growing among the traders’ community while the policy is being opposed by the supporters of the PML-N. Politically, the Shehbaz regime is facing more isolation over this new taxation measure. There are other measures that can be taken to bring all traders into the tax net but one-sided decisions will not produce desirable results.

The collection of taxes is necessary to keep the economy wheel going but it should not be done through coercive taxation measures. Instead of bringing any good, the imposition of the sales tax is having a bad effect and giving birth to negative trends in business circles. The government needs to revisit its policy regarding the introduction of this tax. It should look for other measures with the help of the Federal Board of Revenue for the collection of necessary taxes. The Ministry of Finance should take all trader bodies on board before taking any such decision. Our economy cannot afford strikes by traders and the government should reconsider its decision regarding the enforcement of sales tax on utility bills, which are already cluttered with taxes and surcharges. Moreover, the government needs to reform its tax-related regime. It should first and foremost target the big fish that evade taxes and earn hefty profits without paying a single penny to the national exchequer.

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