Miftah cites political pressure as the reason behind not levying tax on retailers

Again suggests fixed rate for traders

KARACHI (Web Desk) – Miftah Ismail – who twice served as finance minister in the PML-N government but is currently more or less side-lined by the party – on Saturday blamed political pressure for his inability to tax retailers – a statement that reflects Pakistan’s inability to widen the tax and base as well as increasing the tax-to-GDP ratio.

The statement comes as the government is trying hard to enhance revenue generation amid the current financial crisis not only to reduce fiscal deficit but also to meet a key condition set by the International Monetary Fund (IMF) which has been pressing Islamabad to expand tax base in the country.

However, the incumbent government, like the previous ones, lacks ability to bring more people within the tax either due to political compulsions or the power enjoyed by different interest groups to influence the state affairs. That’s why indirect taxes have remained the sole focus of the governments, thus burdening the low-income groups/ salaried class again and again.

Miftah told a private TV channel that they had to back down after attempting to bring the traders into tax net as they resorted to a strong opposition while exerting political pressure. Out of around 2.2 million outlets [shops] in the country, only 30,000 were paying taxes, he lamented.

However, he rejected the use of term “mafia” by former Federal Bureau of Revenue (FBR) chairman Shabbar Zaidi, saying lobbies did exist around the world which protected the interests of their respective groups.

Favouring imposition of a fixed rate, a proposal presented by him during his stint as finance minister, Miftah said paying a small amount like Rs3,000 per month as tax shouldn’t be a problem, but added that no one wanted to pay taxes.

About the real estate sector, he called for encouraging construction but curbing the practice of trading files discouraging and said property should be taxed as people were making huge profit by buying and selling files.

When comes to agriculture, Miftah said tax should be imposed on acreage [according to the landholding, not produce] and added that the provinces enjoyed the authority to levy and collect any tax on the sector [after the 18th Amendment].

According to the former finance minister, the provinces are not interested in revenue generation through the agri culture as they receive a huge amount of money every year [under the National Finance Commission (NFC) Award.