In a tense standoff, a team from the Paksitan’s Federal Board of Revenue (FBR) faced strong resistance from local traders during a visit to a Lahore market.
The team, tasked with collecting advance tax under the recently launched Tajir Dost Scheme, was surrounded and threatened by traders who refused to comply, according to a report by ARY News.
The FBR, which is trying to bring more traders into the tax net, found itself in a challenging situation as shopkeepers vehemently opposed the advance tax collection. This development has highlighted the broader concerns surrounding the new tax initiative, as traders across Pakistan have expressed frustration and anger over what they see as an unfair and poorly implemented policy.
Traders Refuse to Pay: Tensions Rise in Lahore Market
As the FBR team arrived in the market to collect an advance tax of Rs. 1,000 from each trader, they were met with immediate opposition.
Traders warned the officials to leave the market and refused to pay a single rupee under the new scheme. The shopkeepers, agitated by the visit, openly threatened the team, creating a tense atmosphere in the marketplace.
According to sources, the FBR officials were left with little choice but to retreat in the face of growing hostility. The traders made it clear that they would not comply with the demands of the Tajir Dost Scheme and were ready to take more extreme measures if necessary.
This confrontation in Lahore occurred shortly after notices were issued to traders in various cities across Pakistan, indicating that the discontent is widespread. The business community has been vocal in its opposition to the scheme, calling it “inappropriate” and accusing the government of deviating from established procedures.
Tajir Dost Scheme: A Controversial Initiative
The Tajir Dost Scheme, launched by the FBR to bring local traders under the tax umbrella, has become a flashpoint for conflict between the government and the business community. The scheme aims to streamline tax collection by introducing a system where traders pay a fixed advance tax, but it has been met with resistance from the outset.
Many traders argue that the scheme is ill-conceived and places undue pressure on small businesses, which are already struggling in the current economic climate. Some have even suggested that the government’s approach lacks sensitivity to the realities faced by traders in Pakistan, where fluctuating market conditions and rising inflation make fixed tax payments difficult to manage.
The controversy surrounding the Tajir Dost Scheme is not new. Economist Dr. Khaqan Najeeb, speaking on ARY News, pointed out that a similar initiative was proposed during the tenure of former Prime Minister Shaukat Aziz.
That scheme faced fierce opposition from traders, resulting in widespread strikes across the country. Dr. Najeeb noted that the present government’s attempt to revive the idea has once again triggered discontent among the business community, which remains skeptical about the scheme’s viability.
The Tajir Dost Scheme has been criticized for its potential to disrupt the delicate balance between the government and the trading community. As traders across Pakistan refuse to comply, the government may be forced to reconsider its strategy in order to avoid further escalation.
Traders’ Counterproposal: Annual Tax Payments and Category-Wise Collection
One of the central reasons behind the traders’ opposition to the Tajir Dost Scheme is the issue of how and when taxes should be collected. The FBR’s current proposal requires traders to pay advance tax on a quarterly basis, with the first installment for the period of July to September 2024 due in October.
However, many traders have expressed a preference for paying taxes on an annual basis, which they believe would be more manageable.
The idea of collecting tax on a category-wise basis, as opposed to a door-to-door survey, has also been floated as a more efficient method. Sources indicate that the FBR is considering this proposal, as it would simplify the process and make tax collection more systematic. Under this system, businesses would be divided into major categories, and a fixed tax amount would be determined for each category.
According to insiders, this method could reduce the burden on individual traders while making it easier for the FBR to enforce compliance.
However, traders remain cautious, with many insisting that the quarterly payment system would still be too onerous, especially for smaller businesses.
Naeem Mir, the Chief Coordinator of the Tajir Dost Scheme, acknowledged the traders’ concerns during a conversation with Business Recorder. He emphasized that while the FBR is committed to finalizing a mechanism that works for both parties, the traders’ demand for annual payments may be difficult to implement. At the same time, he reassured the business community that the tax would be adjustable and that the FBR is open to reducing the upper limits of fixed tax from Rs. 60,000 to a more reasonable figure.
The FBR has been regularly convening meetings with traders’ representatives to address their concerns. These negotiations will likely play a critical role in determining the future of the Tajir Dost Scheme, as the government seeks to balance its need for increased tax revenue with the demands of the trading community.
The incident in Lahore is a reflection of the broader struggle between the FBR and the traders’ community over the Tajir Dost Scheme.
While the government is intent on bringing traders into the formal tax net, the resistance from shopkeepers highlights the deep-seated challenges in implementing such policies in Pakistan’s complex economic landscape.
The Tajir Dost Scheme, though well-intentioned, has so far failed to win the support of the very people it aims to regulate. Traders are standing firm in their opposition, demanding changes that would make the tax system more palatable to them.
As both sides continue to negotiate, the outcome will be pivotal in shaping the future of tax reform in Pakistan.
For now, the government faces a difficult choice: either make significant amendments to the scheme or risk facing further resistance from one of the country’s most influential economic groups.
