Two.
Not two thousand, not two hundred. Two traders — one in Quetta, one in Rawalpindi — who were not already filing returns have joined the Federal Board of Revenue’s simplified scheme for small retailers. Three hundred and seventeen people registered; three hundred and fifteen of them were already inside the tax system.
The annual target was fifty billion rupees. The collection so far is twenty-six million. That is about one twentieth of one per cent.
I want to sit with this for a while, because it is the most informative failure Pakistani policy has produced in months, and it will be read as a story about lazy shopkeepers. It is not.
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Consider what was on offer, because it was not a small thing.
One per cent of turnover. A one-page return. A slogan — One Page, One Return, One Percent — designed to fit on a banner. No routine audit. No point-of-sale machine. No digital invoicing. A green plate for your shop, under which, in the board’s own description, field teams would generally not enter your premises unless a major anomaly appeared.
I wrote on the ninth of September that this amounted to the state offering to stop looking: that by surrendering audit, POS integration and invoicing, the FBR was giving up every tool by which it could verify a turnover figure, in exchange for a shopkeeper declaring one at all. I thought it was a poor bargain but an understandable one, given that every documentation attempt for thirty years had failed.
The trade turned it down anyway.
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Here is why that matters more than the revenue.
The entire theory of the scheme was that traders stay outside the net because compliance is burdensome. Too much paperwork, too much intrusion, too many officials in the shop. Remove the friction and the base will widen. Every simplification drive in this country for two decades has rested on that premise.
Two people.
If the obstacle were friction, a one-page form with no audit would have moved somebody. What the result suggests is that the objection was never to the manner of paying. It was to paying. And you cannot simplify your way past an objection to the principle, because simplification addresses a cost the objector was not actually incurring.
There is a second possibility and it is not more comfortable. It may be that traders looked at an offer this generous and concluded that the state’s position is weak — that a government reduced to asking is a government that will ask again, on better terms, if you wait. In that reading, each concession teaches the lesson that concessions are available.
I do not know which explanation is right. Both are worse than the one the policy assumed.
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The minister’s response is the part I would underline for anyone designing the next scheme.
“By acting on the demands of traders, the government has fulfilled its promise,” said the minister of state for finance. “Now shopkeepers must make the scheme a success.”
Read that twice. It concedes that the scheme was built to the specifications of the people it was meant to tax — and it locates the failure in their subsequent refusal to co-operate with a design they themselves requested.
A tax is not a product. Its success does not depend on the willingness of the taxed. When a finance ministry starts describing collection as something citizens must help make succeed, the relationship has been inverted, and the inversion is the reason the number is two.
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Now set this beside the other registration scheme running this month.
The Fuel Pass System gives motorcyclists five litres a week at a hundred rupees off. To get it you text your CNIC, your plate number, the first letter of your province and your vehicle’s registration date to a shortcode, then text again before every fill. Petrol dealers have threatened to shut down over it, because they must sell below the pump price and then recover the difference from a state that currently owes oil marketing companies sixty-six point seven billion rupees.
Two schemes, one giving money out and one taking money in, both routed through voluntary registration, in a country where the registration system is the thing that does not work.
The pattern is not incompetence. It is a preference — for mechanisms that ask people to come forward, because the alternative mechanisms require the state to go and look, and going to look is where Pakistani tax policy has always lost its nerve.
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Fifty billion rupees, for scale, is about two-thirds of the fuel relief package the government approved this month and Jamaat-i-Islami is marching against as inadequate. It is a real number. It was forgone.
The lesson available here is cheap and it is unlikely to be taken. The next simplification will be announced within a year, with a shorter form and a better slogan, and it will be reported as reform.
Two traders. One in Quetta, one in Rawalpindi. Somebody should find out what persuaded them, because whatever it was, it is the only thing in this entire exercise that worked.
[Image: The Express Tribune]
