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Nationwide Strike Announced by Traders Against Government Tax Reforms
The government’s widely promoted tax reform initiative is expected to face significant resistance as the traders’ community has announced a nationwide strike on Wednesday (today). This strike has garnered partial support from several political parties and trade associations.
Ahead of the strike call, representatives of traders visited the Federal Board of Revenue (FBR) headquarters on Tuesday to voice their dissatisfaction with FBR Chairman Rashid Mahmood and his team. The concerns centered on the Tajir Dost Scheme, implemented in April, and the newly notified tax rates that came into effect in August.
Challenges for the Government
The expansion of the country’s tax base has become a significant challenge for the ruling PML-N and its coalition partner, the PPP, as many of the protesting traders are affiliated with these parties. Meanwhile, opposition parties, including JUI-F, Jamaat-i-Islami, and Awami National Party, have declared their support for the aggrieved traders.
Mr. Rashid Mahmood stated that the FBR is open to resolving the “legitimate issues” raised during the meeting with traders’ representatives. “We are ready to make amendments to the SRO to address their concerns,” he said. However, he emphasized that the FBR will not withdraw the Tajir Dost Scheme, which aims to bring the retail sector into the tax net.
According to Mahmood, the retail sector contributes 20% to the GDP but remains largely untaxed. Agriculture, also contributing 20% to the GDP, is managed by provincial authorities, as are services. “We have no choice but to bring the retail sector under the tax net,” he remarked.
He hinted at establishing a market-level review mechanism with representation from tax officers and traders to ensure no shopkeepers face unfair tax rates. “We can rectify such issues by making amendments to the SRO,” he added.
Background on the Tajir Dost Scheme
The SRO 457 of 2024 was issued on March 31 to notify special procedures for the Tajir Dost Scheme, and SRO 1064 of 2024 was issued on July 22 to specify area-wise monthly advance tax rates for traders. Under the scheme, tax rates will be collected from shopkeepers in 42 cities across Pakistan at a fixed rate ranging from Rs100 to Rs20,000 per month, based on the fair market value of their stores.
KCCI and Trade Associations’ Support
Iftikhar Ahmed Sheikh, president of the Karachi Chamber of Commerce and Industry (KCCI), has urged all members to fully support Wednesday’s nationwide strike by closing their businesses to pressure the government into withdrawing the Tajir Dost Scheme and reducing high electricity bills and other taxes.
He called for the withdrawal of the scheme and the notices issued to both registered and unregistered traders/shopkeepers demanding an advance tax of Rs60,000 per month.
Muhammad Kamran Arbi, president of the SITE Association of Industry, has also extended firm support to the traders’ strike. The Korangi Association of Trade and Industry has similarly announced its support, with its president Johar Qandhari urging the government to promptly address the demands of the business community.
A Call for Public Action
Speaking at a press conference at the National Press Club, Kashif Chaudhry, president of the Central Association of Tajran Pakistan, announced that the business community will observe a complete shutdown as a public referendum against the government’s decision.
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