Couldn’t tax retailers due to internal politics: Miftah

ISLAMABAD: Former finance minister Miftah Ismail said on Saturday that retailers (shopkeepers) could not be taxed during his stint at the Q-block due to “internal politics.”

Speaking on Geo News programme “Naya Pakistan”, Miftah said: “There are 2.2 million shops [in Pakistan] and only 30,000 pay income tax.” “When we tried to impose taxes, shopkeepers put political pressure,” he said, mentioning that as a result, “we had to back down”. Miftah’s remarks came in response to the recent remarks made by former Federal Bureau of Revenue (FBR) chairman Shabbar Zaidi.

In an interview two days ago, Zaidi expressed his frustration at bringing retailers under the tax net. “Retailers are a market mafia and when we take action against them, they go on a shutter down strike.” The traders in Karachi, he also said, had “thrashed” him and were unwilling to participate in any documentation. “They [retailers] said that no one in the market would pay tax.”

Miftah said that Zaidi’s words held a lot of truth; however, the term “mafia” was not accurate.

“I don’t think these lobbies... which exist all around the world - polititcal lobbies, retailers’ lobbies and agricultralists’ lobbies - should be called mafias,” Miftah said.

Zaidi, in his interview, remarked: “None of our governments are powerful enough to fight with [retailers]. The tax system cannot be fixed unless you bring them under the tax net.”

In response, Miftah said it was the retailers’ duty to pay tax. “If a tax of 3,000 rupees is imposed on all shopkeepers, it will not make much difference to them. Who cannot pay Rs100 in tax per day? Understandably, no one likes to pay taxes, but it is a lobby. Not a mafia.”

However, he said imposing taxes on agriculture was complicated. “Only provinces can collect this tax, not the Centre. [However] you have given the provinces so much money, they don’t bother collecting the agriculture tax,” he added. He added that only acreage should be taxed.

Miftah said it was the same case for real estate. He suggested that construction should be encouraged in the country while “file trading” should be discouraged.

“There should be a tax on property. People are buying and selling files,” he said.

“Various NOCs are sought for setting up industries. It is difficult to start an industry and easy to invest in real estate,” he said.