Aasan Tax Scheme Gets Poor Response from Retailers

Aasan Tax Scheme receives a poor response from retailers, with only Rs 26 million collected against the Rs 50 billion target, highlighting continued resistance to tax registration. Even meeting retailers' demands has not led to results The response of the retailers to the Aasan Tax Scheme has been underwhelming, to say the least. With just a week remaining before it expired, only 517 retailers have opted for it, with only two new retailers having registered, the rest having been already registered, but another 4500 or so have registered but not completed the registration, and more to the interest of the Federal Board of Revenue, have not paid an tax. As a matter of fact, only Rs 26 million have been collected under the scheme, which had been targeted to collect Rs 50 billion. That there has been such a poor response to the scheme shows that even if the traders' demands are all accepted, their prejudice against registration cannot be overcome. The traders' demands had all been accepted if they would only come within the tax net. That, it has become clear, they are not willing to do. The Aasaan Tax Scheme had been designed in consultation with the traders' representatives, and included conditions which were almost demeaning to taxation officials. Traders were to have a plaque installed outside their premises if members of the scheme, prohibiting taxation officials from even entering, let alone inspecting, the premises. Tax was to be paid at one percent of turnover, turnover being determined by the retailer. Any dispute about turnover was to be settled by the local market association. Retailers did have the option of continuing to file ordinary returns. It was also provided that retailers who did not file under either, would face stiff penalties, Rs 10,000 for the first month of non-compliance, Rs 25,000 for the second and Rs 50,000 for the third. Bringing retailers into the tax net is something the IMF has been stressing, and the desire to bring retailers into the tax net is rooted in that. The Prime Minister is himself an old traders' leader, and traders will not find a PM more sympathetic to their desire to avoid taxmen. This is the main reason why they got their demands accepted. The refusal to register is obviously out of a fear that the scheme may be abolished later, but the traders should be careful that they do not overplay their hand. At the moment, they do not have any demands, just a mulish refusal to comply.