KARACHI: Traders decided on Monday to gradually withdraw their savings from banks as a mark of protest against the recently imposed 0.6 per cent adjustable advance income tax on bank transactions, calling it exorbitant and an unjustified move by the government to bring non-filers into the tax net.

A key organisation of Karachi traders took the decision after a series of different moves in recent weeks which saw closure of different markets and commercial centres for a day one after another in protest against the tax.

“This is not acceptable in any way,” said Ateeq Mir of Karachi Tajir Ittehad — a platform for nearly 300 markets and traders’ associations.

“We held a lengthy meeting today [Monday] and finally decided to ask our members to withdraw their savings from banks gradually in instalments of Rs50,000 which is not taxable. It’s a kind of protest we lodge against a 0.6pc tax.”

He claimed that over the past couple of weeks traders had lost millions of rupees only on that account. He said banks charged each truncation of over Rs50,000 at the rate of 0.6pc and many traders were unaware of this new tax.

Meanwhile, the Gujrat Chamber of Commerce and Industry, Pakistan Electric Fan Manufacturers Association, All Pakistan Pottery Manufacturers Association and other trade and industry organisations in Punjab as well as the Khyber Pakhtunkhwa Chamber of Commerce and Industry and other trade bodies in KP have also rejected the 0.6pc tax on bank transactions.

At their meetings, the traders and businessmen criticised the tax and asked the government to immediately withdraw it.

The government’s decision to tax non-filers at the rate of 0.6pc for their every banking transaction is also seen as a move in a haste which can be introduced with better planning and attractive offer to those who are willing to join tax net. They find a few flaws which can be addressed for better return and acceptability among the people.

“It’s basically a turnover tax with no distinction,” said senior analyst Muzammil Aslam of Emerging Economic Research in Karachi. “I think the government should have announced some amnesty for a few months and then asked non-filers to join the tax net before that period, otherwise they would be charged for their banking transaction. Secondly, 0.6pc is quite high ratio which should also be addressed.”

In his budget speech, Finance Minister Ishaq Dar called the “existence of a parallel informal economy” as a major policy challenge in reforming the informal sector which, according to him, took the benefit of all services of state but did not contribute to the revenue required to provide these services.

“Accordingly, it is proposed that adjustable advance income tax at the rate of 0.6pc of the amount of transaction may be collected on all banking instruments and other modes of transfer of funds through banks, in the case of persons who do not file income tax returns,” said the budget document.

The hue and cry by the business community also forced the opposition parties to raise their voice against the tax, with the PPP accusing the PML-N government of toeing policies of the IMF.

“The protest by traders’ associations across the country, especially in Karachi, is a plain message to the PML-N government that the masses and the traders are fed up with it and its policies of crushing the masses and economy,” the PPP leaders said in a statement. They assured the traders that the PPP would stand by their side in this case.

Jamaat-i-Islami termed the tax a ‘cruel move’ and said it would badly affect business activities. “Any delay in removal of the tax will further damage business sentiments across the country,” it said in a statement.

Published in Dawn, July 7th, 2015

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