After stupendously failing to get businesses to adopt point-of-sale (POS) machines, the FBR is now pushing the government to grant it powers to seal non-compliant shops. This seems a desperate effort that may be open to abuse, as some ‘suspects’ may end up getting sealed despite not being required to comply. The fact is that the FBR already had the power to take punitive actions such as disconnecting utility services and levying penalties of millions of rupees, but it has not really used them. This is why all it has to show through these existing powers is registering barely 2,500 retailers.
The POS initiative aimed to increase the digitisation of sales records to allow for accurate calculation of revenue and collection of associated taxes. Finance Adviser Shaukat Tarin had made POS machine adoption a major target, hoping to get about 500,000 machines registered. The actual number so far is just 15,000, which is even more disappointing when we consider that there were already 11,000 machines linked to the FBR system at the start of the year. We must also ask why Tarin persisted with this moonshot target when the FBR had reportedly told him in June that his targets were nothing short of impossible.
For obvious reasons, the assurance to the IMF that the initiative would generate Rs50 billion in the current fiscal year has also fallen by the wayside. But we should also note that the problem is not just failure to convince businesses to adopt POS machines. Records show that retailers around the country are using about 65,000 POS machines provided by various banks. We would have thought these machines could easily have been integrated into the FBR system — perhaps by going through the issuing banks — but this has not been the case. On the other hand, it is notable that businesses have refused to adopt the system despite refund claims being denied for a vast majority of larger retailers that have failed to integrate. It is not unfair to speculate how much money these businesses are willing to lose in order to keep the true scale of their revenues hidden from the taxman.
Published in The Express Tribune, December 23rd, 2021.