Traders end strike after 11-point accord with govt

ISLAMABAD: With reconciliatory role played by the PTI leader Jehangir Khan Tareen (JKT), the government and traders on Wednesday struck a deal by signing a 11-point agreement after which the traders announced to end the shutter down strike.

The signed deal among government and traders includes deferment of CNIC condition on purchase of Rs50,000 for three months, reduction in tax rate from 1.5 to 0.5 percent on turnover up to Rs100 million, the limit of electricity bills from Rs50,000 monthly bill increased to Rs100,000 for registration of sales tax and exemption of 1,000 square feet shop from registration of sales tax.

All these steps will result into exclusion of thousands of registered shopkeepers/retailers from the requirement of registration of sales tax. The government will have to bring amendments through a bill or presidential ordinance to reduce the tax rate by 1 percent bringing it down to 0.5 percent from the existing 1.5 percent and some other relaxations, which were part of the Finance Act 2019-20.

Many have termed this truce as “surrender” of the government for achieving only political objectives and it may result into stiff resistance from the IMF as the Fund’s review mission is currently in the town for gauging the performance of the governmentand striking staff-level agreement for approval of second tranche worth $451 million.

However, Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh dispelled impression of any political objective, arguing that the government accepted demands of traders for achieving national objectives. But he did not reply that how many traders would go out of tax system because of incentive package announced by the government in order to end shutter down strike of traders all over the country.

All Pakistan Anjuman-e-Tajran (APAT) Chairman Khawaja Shafique, Khawaja Salman Siddique and other leaders announced to end shutter down strike at a joint news conference addressed along with Dr Abdul Hafeez Shaikh, PTI leader Jehangir Khan Tareen and FBR Chairman Shabbar Zaidi at the Finance Ministry on Wednesday.

Abdul Hafeez Shaikh announced that government and traders have struck an agreement. He read out 11-point agreement signed by Shabbar Zaidi and traders’ leaders after holding two days parleys in presence of JKT.

The signed agreement reads out that (1) up to turnover of Rs100 million, the trader will pay tax of 0.5 percent instead of 1.5 percent. (2) The trader having annual turnover up to Rs100 million will not become withholding agent. (3) The FBR has increased limit of registration for sales tax through electricity bill from Rs0.6 million to Rs1.2 million on annual basis. (4) The government will fix limits for turnover tax for the sectors which are making low profits. (5) Jewellers’ problems will be resolved in consultation with Jewellers Association. (6) The government will review again imposed withholding tax on renewal of licence of Arthis (middleman). (7) The FBR will establish special desk for resolving problems of traders on immediate basis. The FBR will appoint grade 20 or 21 officer and will meet with traders’ leaders on monthly basis to resolve their problems. (8) For registration of new traders, the FBR will come up with income tax return in Urdu and traders committees will cooperate for registration of new taxpayers from traders. (9) The shop up to 1,000 square feet will be exempted from registration of sales tax and decision to this effect will be taken in consultation with traders’ committees. (10) Retailers who are also doing business of wholesale, their registration into sales tax will be taken in consultation with traders committees. (11) Any punitive action on condition of CNIC has been deferred till January 31, 2020.

When Abdul Hafeez Shaikh was asked that how many traders would come into tax system after signing of this agreement, without sharing any specific number or target, he replied that the government made effort to give them confidence. He mentioned point 8 of the signed agreement and said that the traders would be facilitated in order to bring them into tax net. He said that there were only 392,000 retailers in tax system out of total 3 to 3.5 million. He said that it was hoped that this agreement would help promote economic activities and the trading community would also come into tax net to discharge their national duty. Pakistan, he said, requires resources to meet infrastructure, social safety nets and defence requirements of the country.

Shabbar Zaidi said that the FBR made collection of Rs3.8 billion from limit up to Rs0.6 million for annual electricity bills for the purpose of sales tax registration that had now increased to Rs1.2 million per annum.

Khawaja Shafique praised the PTI leader Jehangir Khan Tareen during the news conference and said that he was asked not to mention his name but he could not do so because it was because of him (JKT) that when they got disappointed and were ready to go back to their home cities, Tareen played role to break this deadlock.