WITH reference to the letter ‘Replacing GST with VAT’, the problem is that most shop owners will refuse to register for paying VAT.

How would FBR officials, for instance, recover VAT (or any other tax) from the thousands of shops in Karkhano Bazaar in Hayatabad (Peshawar)? Even if the FBR does get online access to bank accounts, and sends notices to those who are involved in smuggling, how will they be able to force the respondents to reply?

Knowing how such people operate, you can be sure the tax notices will simply be thrown into the trash can. In PML-N’s first tenure, a survey of shops in Lahore’s Liberty Market evoked a violent protest when the traders realised that their true incomes would be known to the FBR.
The prime minister himself asked the FBR team to withdraw.

To get retailers to register and pay VAT, a carrot-and-stick policy will have to be adopted. Those who do register should be amply rewarded and those who refuse should be penalised. But this cannot be done unless FBR personnel are given armed guards to force traders to comply.

Printed in DAWN, August 2, 2013