ISLAMABAD: The government plans to once again challenge the million-strong retailers’ shutter power in the forthcoming national budget, this time bringing into the tax net all retailers that make sales of more than Rs22,000 a day.
The government roughly estimates that there could be more than half a million retailers mandated to pay tax by collecting it from buyers, a method that was defeated in 1998 and 1999. Both times the top tax authorities had to eventually call in the army to help determine the actual sales that the retailers make in a day.
The efforts remained without positive dividends, with the net result that the shutter-power demonstrated an insurmountable defiance - retailers in thousands closed down their shops whenever the assessment parties approached them.
This time round, as the Federal Board of Revenue (FBR) spokesman puts it: “we are determined to implement the strategy of taxing the retailers under the net of GST.” When asked what could be the rate of tax, Israr Rauf said, “It is yet to be determined.”
He, however, agreed that more than half a million retailers might be targeted for collection of tax. “Declaration (of turnover per month) would be voluntary. Retailers would not be approached with intimidating tactics.”
When asked if the government had taken precautions against untoward response from the retailers, he said, “I hope there would be none.”
Senior tax officials, when asked why did the FBR spokesman hope no untoward response this time, said the retailers are being offered a package implementing which would be easy for them. And it might also help them increase their incomes.
When asked to explain, a former top official of the FBR hierarchy said, “it is simple. The retailers would not be forced to make honest declarations for a start. They would be allowed to charge shoppers the tax as per the rates specified, but, as the GST law demands, they are bound to deposit the money extracted with the treasury, which most of them would not be abiding by, and that way would make extra buck.”
No high tax official, however, is ready to explain the strategy of FBR, which, as per the spokesman’s response to The News queries, could be understood only as another attempt first at intimidating the retailers and then reassuring them that the authorities would not be stepping onto their tails and would be strictly keeping tax-money and tax-return depositing as a voluntary act.
In all previous occasion when the Retail Tax or Turnover Tax was being planned, the retailers shied away and then resorted to countrywide defiance not because they had to pay the tax - it was to be extracted from the shoppers anyway - but because filing the tax return had consequences.
The retailers’ bodies had one simple argument against conceding: The Income Tax authorities would be set after them once they had declarations on GST.
Source: http://www.thenews.com.pk/daily_detail.asp?id=229590
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