EDITORIAL: The Federal Board of Revenue’s (FBR’s) decision to begin nationwide mapping of markets and individual shops is a logical next step after the poor response to the government’s Asaan Tax Scheme for retailers as out of 1016 returns filed by retailers under the scheme only 91 are new filers.
FBR field officers will be visiting markets alongside trader representatives, identifying individual shops and creating awareness about registration and filing.
The scale of the task is evident from the gap between the country’s roughly 4.3 million commercial WAPDA electricity meters and the only 600,000 or so commercial meter holders who filed tax returns.
The Asaan Tax Scheme represents the umpteenth attempt by successive governments to bring the retail sector into the tax net. There is, however, an important difference this time.
The government appears to have gone about the task in a relatively more organised and consultative manner, involving trader bodies and market representatives in designing and implementing the scheme. It offered retailers a relatively simple route into the formal tax system, reducing the procedural burden and, for many small traders, limiting the immediate tax liability.
The scheme nevertheless left much to be desired. By taxing turnover rather than strictly applying the principle of taxing income, it departed from a fundamental principle of a fair tax system. Yet if its immediate purpose was to document businesses, register retailers and establish a culture of filing returns, it could have served as a useful starting point. That opportunity, however, appears to have been largely squandered thus far.
According to the latest figures cited by the FBR, around 190,000 retailers had registered under the scheme. This remains a small number relative to the size of the sector, and registering for the scheme, it must be remembered, is not the same as filing returns and paying the tax due.
The FBR now intends to target between 500,000 and one million retailers, with the balance brought into the net through enforcement.
The mapping initiative is therefore welcome, but it must not become another documentation exercise that produces little beyond lists and databases.
Once the government knows where the shops are and who operates them, it must demonstrate the political resolve to act on that information. Non-filers must face meaningful consequences, while those willing to register and comply should continue to receive practical assistance.
The penalties announced so far – Rs10,000 in the first month after the filing deadline, Rs25,000 in the second and Rs50,000 in the third – hardly appear sufficient to deter a business generating substantial sales. If penalties are to change behaviour, they need to be sufficiently consequential, consistently imposed and, crucially, actually recovered.
The modest revenue ambition of the scheme also deserves attention. Against an overall potential tax contribution from retailers that according to some estimates amounts to as much as Rs3 trillion, the scheme’s target of just Rs50 billion was hardly an onerous demand. In revenue terms, this is little more than chump change.
But the significance of the exercise goes beyond the immediate collection target. If the state cannot secure compliance with a scheme deliberately designed to make entry into the tax system easier, the credibility of future tax reforms will inevitably suffer.
The government has now taken the sensible step of mapping the sector. The next test is whether it will follow through. Retailers have repeatedly demonstrated their capacity to resist taxation through political pressure and disruption. This time, that pressure must not once again trump the state’s resolve to build a broader and fairer tax base, with compliance treated as an obligation rather than something to be negotiated, and the rules applied consistently across the board.
The credibility of the entire reform effort will ultimately depend on whether this resolve is sustained.
Copyright Business Recorder, 2026