The government’s highly promoted tax reform is expected to encounter significant opposition as the traders’ community has announced a nationwide strike today (Wednesday), with partial backing from a few political parties and trade associations.
Ahead of the strike, trader representatives met with the Federal Board of Revenue (FBR) officials on Tuesday to voice their dissatisfaction with the Tajir Dost Scheme, implemented in April, and the recently introduced tax rates effective since August.
The expansion of the country’s tax base now presents a major challenge for the PML-N and its coalition partner, the PPP, as many protesting traders are affiliated with these parties. However, opposition parties, including JUI-F, Jamaat-i-Islami, and Awami National Party, have expressed support for the striking traders.
FBR Chairman Rashid Mahmood stated that the FBR is open to addressing ‘legitimate issues’ raised during the meeting, indicating a willingness to amend the SRO to alleviate concerns. However, he made it clear that the FBR will not withdraw the Tajir Dost Scheme, which is designed to bring the retail sector under the tax net.
Mahmood emphasized the necessity of including the retail sector, which contributes 20% to the GDP, in the tax base. He noted that while agriculture, which also accounts for 20% of GDP, is managed by the provinces, the retail sector remains largely untaxed. “We have no choice but to bring the retail sector under the tax net,” he stated.
He also suggested establishing a market-level review mechanism with representation from both tax officers and traders to ensure that shopkeepers are not subject to unfair tax rates, with the possibility of amending the SRO to correct such issues.
SRO 457 of 2024, issued on March 31, notified special procedures for the Tajir Dost Scheme, while SRO 1064 of 2024, issued on July 22, outlined area-specific monthly advance taxes for traders. Under the scheme, taxes will be collected from shopkeepers in 42 cities nationwide at a fixed rate of Rs100 to Rs20,000 per month, depending on the fair market value of their stores.
Appeal from KCCI Meanwhile, Iftikhar Ahmed Sheikh, president of the Karachi Chamber of Commerce and Industry (KCCI), has called on all members to fully support today’s nationwide strike by closing their businesses, in an effort to pressure the government into withdrawing the Tajir Dost Scheme and reducing high electricity bills and other taxes.
He demanded the withdrawal of the scheme and the cancellation of notices sent to registered and unregistered traders, which demand an advance tax of Rs60,000 per month.
Muhammad Kamran Arbi, president of the SITE Association of Industry, has also pledged strong support for the traders’ strike. The Korangi Association of Trade and Industry has similarly announced its backing, with its president Johar Qandhari urging the government to promptly address the demands of the business community.
During a press conference at the National Press Club, Kashif Chaudhry, president of the Central Association of Tajran Pakistan, announced that the business community would observe a complete shutdown as a public referendum against the government’s decision.
