The Union of Small and Medium Enterprises has condemned the new tax on cash withdrawals, calling it unjust and poorly designed. Union President Zulfikar Thaver criticized the Federal Board of Revenue (FBR), arguing that taxes should apply to earnings, not savings. He pointed out that bank deposits already face a 20% withholding tax on interest, making the withdrawal tax a form of double taxation.
UNISAME argued that the tax disproportionately affects small and medium-sized businesses (SMEs) that rely on cash for supplier payments and wages. Many workers and vendors lack access to digital payment methods, necessitating cash transactions. Thaver emphasized that Rs. 50,000 is essential for daily operations, not large purchases.
The policy also places a greater burden on SMEs and ordinary people compared to large corporations and wealthy individuals who primarily use digital transactions. UNISAME questioned the FBR”s decision-making process, citing a lack of stakeholder consultation and cost-benefit analysis. Thaver expressed concern over the potential impact on SMEs and informal workers.
UNISAME is urging the FBR to revoke or amend the tax, warning of negative consequences for economic growth, financial inclusion, and low-income households. Thaver suggested that the FBR should concentrate on expanding the tax base to include untaxed sectors and address tax evasion by high-income earners.