Pakistan Traders Demand Lower Turnover Tax Amid Economic Strain
Islamabad-based traders have intensified pressure on the Pakistani government to reduce the turnover tax rate to 0.5% ahead of the upcoming federal budget, citing deepening economic challenges and systemic inefficiencies in tax administration. The call comes amid rising inflation, energy costs, and allegations of corruption within the Federal Board of Revenue (FBR), according to a recent statement from the All Pakistan Anjuman-i-Tajiran (APAT) and Traders Action Committee.
Economic Pressures and Tax Reforms
The traders’ coalition, led by APAT President Ajmal Baloch, praised the government’s recent initiative to simplify tax collection but argued that the proposed turnover tax rate remains excessively high. “A 0.5% rate would incentivize business activity and reduce the burden on modest traders,” Baloch stated during a press conference at the National Press Club. The coalition emphasized that lower tax rates could boost overall economic output while curbing what they describe as “corruption and blackmail” by tax authorities.
Recent data from the Pakistan Bureau of Statistics highlights the severity of the crisis: inflation reached 13.4% in April 2023, driven by surging petroleum prices and a weakened rupee. Small traders, who form the backbone of Pakistan’s economy, have been particularly hard hit. “Many have abandoned their businesses, turning to rickshaw driving or ride-hailing services,” said APAT Punjab President Malik Shahid Ghafoor Paracha.
Allegations of Corruption and Mismanagement
The traders’ coalition accused FBR officials of misusing the Point of Sale (POS) system, alleging “corruption in tax collection mechanisms.” They called for investigations into the assets of FBR officers and the removal of those with dual nationalities. “The current system is a tool for blackmail,” Baloch said, adding that the government should prioritize transparency to restore trust.
Customs authorities have also come under scrutiny. Traders in Balochistan and Khyber Pakhtunkhwa reported that goods are frequently seized at border checkpoints, only to reappear in local markets days later. “This not only harms businesses but also undermines state revenue,” said Baloch. The coalition urged Prime Minister Shehbaz Sharif to address these issues through comprehensive reforms.
Call for Policy Stability and Long-Term Solutions
The traders’ demands extend beyond taxation. They seek exemptions for provinces affected by terrorism, including Balochistan and Khyber Pakhtunkhwa, and a review of the capital value tax (CVT) on vehicle transfers. “A three-year stability in tax structures would provide much-needed certainty for businesses,” Paracha added.
Investor concerns were also raised, with traders noting that capital outflows have worsened due to geopolitical tensions. A proposed amnesty scheme to repatriate foreign investments was highlighted as a potential solution. “Encouraging domestic reinvestment could revitalize the economy,” said Baloch.
Government Response and Path Forward
Prime Minister’s Adviser on Finance Bilal Azhar Kiani has acknowledged the need for tax reform, stating that the government is “exploring ways to streamline processes and reduce compliance burdens.” However, no official announcements have been made regarding the 0.5% turnover tax proposal. Critics argue that without structural changes, Pakistan’s economic recovery will remain fragile.
As the federal budget approaches, the pressure on policymakers to balance fiscal responsibility with economic growth will intensify. For now, traders remain steadfast in their demands, hoping that the government will act decisively to alleviate the crisis.
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