The head of Pakistan’s largest retail industry body has said the government’s newly announced Fixed Tax Scheme avoids the flaws that led to the failure of the widely criticised Tajir Dost Scheme, while describing it as a credible first step towards bringing millions of informal retailers into the tax net.
In a statement, Pakistan Retail Business Council Chairman Ziad Bashir said the new scheme marks a decisive break from the approach that doomed its predecessor, which generated almost no voluntary participation despite repeated extensions and enforcement threats.
However, he cautioned that its success would depend entirely on implementation.
Pakistan has an estimated 3.5 million retail outlets, but fewer than 50,000 currently file tax returns. Bashir argued that this gap is not the result of dishonesty among traders but rather a system that made formalisation costly and unpredictable.
“The informal retail sector is informal because the cost of being formal has always outweighed the benefit,” he said.
Referring to the Tajir Dost Scheme, Bashir said it failed because it asked traders to trust an institution that had historically treated them as adversaries. He noted that enrolment was compelled rather than incentivised, deadlines were repeatedly extended, and traders’ associations mounted sustained resistance.
The new Fixed Tax Scheme, he said, adopts a different approach by offering a flat 1% tax on turnover, a minimum annual payment of Rs25,000, no mandatory point-of-sale systems, no unannounced inspections, and no automatic audit presumption for participants.
Bashir described the initiative as “a peace-of-mind offer” for shopkeepers who have long feared that entering the formal system would expose them to unpredictable tax demands.
He added that the scheme sends a long-overdue signal that the government is serious about broadening the tax base and ensuring that the burden is shared more equitably.
Despite endorsing the initiative, Bashir outlined conditions for its success, saying penalty provisions must be applied consistently, participation must extend well beyond any minimum threshold, and building turnover visibility across millions of small retail outlets would require sustained institutional investment.
“Whether it does depends entirely on the consistency and good faith with which it is implemented,” he said.
