The poor response to the Fixed Tax Asaan Scheme, the voluntary trader registration, suggests that it is heading for a failure, reminding of the successive schemes that have met a similar fate over the decades while fresh initiatives continue to be introduced without any meaningful assessment of the causes of earlier fiascos.

Documenting traders has remained a pipe dream for successive governments despite repeated tax concessions since the 1990s. Most schemes have followed a familiar pattern of repackaging failed initiatives under new names without addressing the underlying causes. The problem, therefore, is not a shortage of registration schemes, but the inability to turn these exercises into a sustainable system of tax compliance.

This raises a further question: Why have successive governments failed to document the retail sector despite offering concessions in tax rates, compliance requirements and documentation procedures? It is also equally important to ask as to why the new scheme has failed to attract traders despite these incentives, a question that merits closer examination.

Pakistan`s tax history is marked by repeated schemes that have produced few tangible results. Initiatives to register traders date back at least to the 1990s. In 1999, the Central Board of Revenue (GBR), now the Federal Board of Revenue (FBR), introduced the Development Tax Scheme (DTS) for small retailers. This was followed by a nationwide tax survey in May 2000 to identify undocumented businesses and potential taxpayers. In September 2000, the CBR went a step further by introducing the Retailers Enlistment Tax Rules, imposing a tax of one per cent on monthly taxable sales. A simplified presumptive income tax scheme followed in 2004, allowing eligible retailers to pay 0.75pc of declared turnover as final tax.

Despite initial publicity and officialenthusiasm, these initiatives failed to produce lasting results, prompting further attempts to document traders in subsequent years. The pattern continued with the Voluntary Tax Compliance Scheme in 2016, the trader documentation initiative in 2019, the fixed tax arrangement through electricity bills in 2022 and the Tajir Dost Scheme in 2024. This period also witnessed organised resistance from trader associations, forcing the government to back down, while other initiatives made little headway in achieving their stated objectives.

This history of repeated attempts raises another question: Have the shortcomings of earlier schemes beenaddressed to ensure the success of the tax asaan initiative? So far, little attention appears to have been paid to these concerns, even as the government continues to rely on familiar measures that have struggled to deliver results in the past.

Background interviews and discussions with policymakers and analysts have identified several shortcomings in the existing scheme that could undermine its success. These weaknesses are not confined to the current initiative as future schemes are unlikely to produce different results unless the underlying structural problems are addressed.

The first factor discouraging shop-keepers from joining the scheme is its design, which makes it less attractive to small retailers. A tax of one per cent on gross turnover may appear modest, but it is levied on sales rather than actual profits. For businesses operating on narrow profit margins, the effective tax burden can be substantial. In contrast, larger retailers with higher profit margins could benefit from the scheme because of their relatively lower tax burden.

The second issue is uncertainty over the scheme`s continuity. The arrangement appears to be limited to this year only, with no assurance that similar concessions will remain available in subsequent years. On the enforcement side, there is a widespread perception that tax professionals and lower ranking FBR officials discourage traders from registering under the scheme, warning that registration could expose them to continued scrutiny and possible harassment by tax authorities. Such concerns are difficult to dismiss and further undermine traders` confidence in the scheme.

The third issue concerns ownership of the scheme. Major trader associations have remained outside the initiative, while those supporting it appear to have limited backing within the trading community. However, it would be incorrect to assume that traders do not pay taxes. Most traders pay withholding taxes through electricity bills, mobile services and certain banking transactions. These payments, however, do not necessarily reflect their actual income, turnover or tax liability.

The scheme`s limited response reflects these concerns. According to the latest figures,only around 1,400 traders have filed tax returns in tax year 2026 under the scheme, including just 150 new taxpayers, indicating a negligible response from unregistered shopkeepers.

The lukewarm response raises a fundamental question: Can registration schemes succeed in a cash-dominated economy where limited transaction records make it difficult for tax authorities to verify business turnover? A more effective approach would be to document the entire supply chain, from imports and wholesale purchases to distribution and retail sales, through electronic payments. This would create verifiable transaction records and reduce reliance on voluntary declarations.

On the demand side, consumers should also be encouraged to use digital payments. The government could subsidise banks and payment service providers to reduce transaction costs for small retailers. In September 2025, the State Bank of Pakistan hadannounced a Rs3.5 billion subsidy for Raast merchant QR payments until June 2026. A similar incentive could help expand digital transactions.

Tax officials also consider the widespread circulation of high denomination currency notes, particularly Rs5,000 notes, a factor facilitating large cash transactions. Discouraging such payments while making digital alternatives cheaper and more accessible could improve documentation.

After decades of unsuccessful experiments, the government must recognise that documenting traders requires documenting transactions.

Without reducing dependence on cash, repackaging old registration schemes under new names is unlikely to produce different results. •