Taxpayer misery


It’s very disappointing, though not very surprising, that the government caved into traders’ pressure and withdrew the fixed tax on them.
There’s also plenty of news suggesting that PML-N Vice President Maryam Nawaz had a role to play in extending that relief to the entire retail sector; which, if true, will surely create a lot of noise very soon because she is not part of the government. It would also play into the script that the ruling party is doing what it can to cajole its core constituency, especially after the beating it took in the recent Punjab by-elections.
But this is one of those areas where no particular recent administration can claim to be any better than the other. Before this government, traders gave a similar slip to Hafeez Sheikh when he was the PTI’s finance minister, and before that, they forced Ishaq Dar to go back on this tough talk when Nawaz Sharif was prime minister.
Finance Minister Miftah Ismail’s explanation, if it can be called that, seems more like an attempt to dilute the headlines than a reliable fiddling of numbers. For, if taking back the tax will cost the exchequer around Rs42 billion, but he’s not bothered because he’s still sure of milking a good Rs34 billion out of them even without it, then why was it needed in the first place and why are they making such a fuss about it?
Regardless, wholesalers and retailers remain a near-20pc part of the economy and will continue to pay only around Rs6b in taxes.
These are very awkward times for such news because there’s no telling what about any more tax reliefs, no matter how political important, will upset the IMF and send the bailout program into a tailspin all over again. It would also mean that the shortfall would be made up for by squeezing already existing taxpayers even more; which, given their circumstances, borders on the criminal. It’s for such reasons that Pakistan has one of the lowest tax-to-GDP ratios in the whole world.