Annual tax of a shop in the top markets of Lahore by Hammad Azhar Federal Minister Economic Affairs

[Kabira]

Pakistan should be making life difficult for tax thief and crimnals. You have crores of rupees in black? Too bad because you can't actually spend that much and get away with it. No new fancy cars. No properties in Bahria's and DHA. Can't spend more then 50k in a shop without CNIC etc

I know all that is already law now since last few years. But imagine if laws like these existed since 1947...

 

[Verve]

For example, to avoid sales tax thefts and saving middlemen and retailers from keep record of it - Government can legislate to make the producers/manufacturers and first importers to put end consumer price tags on their products or publish the retail prices if product is sold in loose form to end consumer, Calculate Sales Tax on final maximum price to be charged to customer, collect it and deposit to state. For example the scenario we talked, considering 10% margins for intermediaries in supply chain the intended final price for end customer is 155.73 which will includes 22.63 ST. So, the producer must print this price on product, and instead of calculating the 17% ST on the price he is selling to distributor, he should charge sales tax based on price for consumer i.e. 22.63. In this way government will get all the sales tax at first stage, for the intermediaries there will be 33.10 (155.73 - 122.63) margin to share, doesn't matter who keep what %age but the price for consumer must not exceed 155.73. In this way there will be no need for intermediaries to keep record of sales tax as they will not be charging any additional sales tax. But that will solve only Sales Tax issue, not the income tax which is calculated based on Income (Profit - Operating Expenses). For small retailers there was proposal of fixed tax --> Link but I am not aware of any progress, but others have to keep record of their purchase, sales, profit and expenses otherwise how state will asses the income and tax liability? I am sure those illiterate whole sellers, distributors etc. can afford to have one computer and operator to keep the records.

As you said, Income tax capture will be very difficult with this process.

Middlemen make the biggest margins because they carry the risk of no sale, not the manufacturers. Once a distributor or wholesaler buys, there's no return of stock to manufacturer. Warranty claims usually go back to distributors. Big numbers in this part.

So getting these in the GST and Income Tax net is far more critical than retailers. Retailers can be controlled with Retail Price stamping.

And it's a lot easier to audit a few distributors and wholesalers instead of millions of retailers. Biggest chunk of GST and Income Tax can only be collected from them, and the bigger retailers who are meant to be GST registered anyways.

It's the middle supply chain that's being focused on and rightly so.

 

[F86 Saber]

Let me begin by thanking you both for correcting me in this calculation, this is not sarcasm. I really mean it. Not just for the favor you've done for correcting me, but also literally exhibiting my point i.e. the taxation system is too complex.
Here are the current figures of education in Pakistan.
https://www.thenews.com.pk/print/309542-pakistan-s-literacy-rate-stands-at-58pc

So here is my question, do you really expect that a person who hasn't even studied past sixth grade will know how to compute the figures of output tax and the input tax along with the tax due whilst passing the rest to the next intermediary?


That 10% markup was a supposition to simplify the calculations. Here is the problem though, unless the business itself wants a model where it is integrated right down to the retail, there will most definitely be middlemen. That's just the reality of the situation. Drastically changing that will present a whole new labyrinth of problems.


As per today's exchange rates 50K is a mere $ 316 dollars, and you want businesses that sale laptops, tv's, fridges, washing machines, furniture etc etc. to document more or less every customer they get for the government? How about the government devises ways to document the money trail through alternate ways such as debit/credit transactions etc. Both get you the same results i.e. a money trail, instead of putting the burden on a business, which generates economic activity and employment, the same employment rates that the political class likes to boast about come election season.

Agreed, the businesses should most definitely be brought in the tax net and be registered. No one is arguing that businesses shouldn't be brought in to the tax net. It's the mechanisms that need reform. Following is something that might interest you.

I will make it very simple for you

1) Every SME owner does not have to pay sales tax.
2) If a SME owner has enough turnover to be paying sales tax, he just has to calculated his whole GST and not for his own supply chain.
3) For an SME owner who has only to calculate his own GST, even if he has only studied till 6th grade he can learn himself as the calculations will be the same year after year and once learned it will be like clockwork for him. If he is so illiterate that he cannot run these simple calculations (i wonder how he is calculating his profit and loss) then he can hire a third party accountant firm who will do it for him for a nominal amount.

 

[Imad.Khan]

After reading through the discussion here i agree that the indirect taxation is abit complicated and requires the tax collection on multiple levels. But what alot of people fail to understand is that the govts had no choice but to apply indirect taxes because the people have been evading direct taxes. If everyone paid their due share then there will be no reason to apply these indirect taxation.

Also there are some people here that are claiming that taxes are being collected to pay of the jews for the loans. In my opinion these people have limited brain cells and should be ignored or banned completely as they are not worth wasting bandwidth on. And just to highlight the reason the govts had to take loans was because our imports outweighed our exports. So either the govts took loans or stop the imports and our largest imports were fossil fuel which means no cars and no electricity. Then these low brain-cell zombies will be the first in line to cry about it aswell.

So in conclusion its basically the people's fault that the poor have to be burdened with these indirect taxes.

 

[Asian.Century]

Lahore Markets and Shops are over charging customers and peotesting at the same time dor heavy taxes.

 

[Asian.Century]

Daily Item price has increased by these local shops, fake price increases by Shop sellers has become the biggest Problem in Lahore and Karachi.

 

[POPEYE-Sailor]

Karachi what they pay to govt

What they got from Govt

What Govt suggest to Eat

 

[BATMAN]

Pakistan business men shall refuse to fill Pakistani registration form, unless govt. promise to apply UK tax model and tax return forms.
Govt. ministers regularly compare UK tax stats. with those of Pakistani, now is the time to trap them in their own web.

Karachi what they pay to govt

View attachment 588843

What they got from Govt

View attachment 588844

What Govt suggest to Eat

View attachment 588845

There's a reason why PPP is still ruling Sindh, while PMLN is not ruling Punjab.

 

[Hakikat ve Hikmet]

Are these tax amounts some sorts of “pranks”?!?! I am pretty sure the owners of these shops spend more money on buying “beef” than taxes....

 

[jupiter2007]

Mandatory law should be passed that ever Business has to be registered with government.
many of the businesses owners pay rent to the shop owners or plaza owners, government should go after them. it’s city government responsibility to help state with business registration. Every Business has to be registered, they have to pay yearly registration fee to stay registered with government. unregistered businesses should not be able to open bank account or able do business transactions. If Any bank allowed unregistered businesses to open bank account, government should go after the bank. All registered businesses should disclose their yearly sale in tax return so tax can be collected.

IMHO, government should form a task force to deal with Business registration and tax collection that should include, ministry of Financial, FBR, NAB, special Police and FIA. IRS has agent that are armed and trained why can’t we have that. Why do we have to rely on I’ll trained moqbar useless police.