The government on Thursday announced that it would immediately start mapping non-compliant shops for taking punitive action against traders, who stayed away from a fixed tax scheme that required only 1% tax payment in return for immunity from audit and liberty to deal in cash.

The decision was taken during a review meeting on implementation of the scheme, a day after it emerged that until the statutory deadline only four new traders joined the scheme.

“The meeting decided that FBR officers, together with trader representatives, will begin mapping markets and shops across the country from Friday (today),” said a statement issued by the Ministry of Finance.

Minister of State for Finance Bilal Azhar Kayani chaired the meeting. Going after the traders will be the most difficult part of the scheme as the PML-N has traditionally been soft towards the trading class, which has a 19% share in the economy but less than 1% contribution to taxes.

FBR Member Strategic Transformation Dr Hamid Ateeq Sarwar said on Wednesday that the government was targeting to bring 500,000 to 1 million traders into the tax net out of the 3.7 million who are outside the system.

Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial said that the government was worried that the response to the tax scheme remained below expectations, with 787 tax returns filed under the new scheme, of which only four were new filers. The government has already given a 15-day extension for filing returns to all taxpayers. It has estimated at least Rs50 billion will be generated from the scheme and has added the amount to this fiscal year’s budget.

The FBR chairman said this week that if the scheme remained successful, the collection should be over Rs100 billion but if it failed, there would be negligible payments.

The state finance minister directed the FBR that its officers, working with trader representatives, should map markets and every individual shop. He said that the shopkeepers must be briefed on the easy tax scheme during the mapping and the FBR officers must visit markets according to a daily schedule.

The government also admitted that there were technical issues in the tax returns specifically designed for the traders. The meeting was briefed that the technical issue in the “other income” column of the tax return, flagged on traders’ identification and complaint, had been resolved, according to a statement.

Addressing the meeting, Bilal Azhar Kayani said the shopkeepers had been given a scheme of their own choice, so there was now no justification for not filing the tax returns. He said penalties had been fixed with the consent and consultation of shopkeepers and urged them to avail themselves of the 15-day extension. After the deadline, a shopkeeper will pay a penalty of Rs10,000 in the first month, Rs25,000 in the second month and Rs50,000 in the third month.

Trade leaders Ajmal Baloch, Kashif Chaudhry and tax consultant Habib Fakhruddin were also present in the meeting. Dr Hamid Ateeq Sarwar, Member Inland Revenue Operations Zubair Bilal, senior FBR officials, and chief commissioners and commissioners from across the country attended via video link.

Kayani remained hopeful that the scheme would pick up momentum once the FBR started chasing the traders. If the traders did not opt for the scheme and even the fines proved insufficient, then strong enforcement measures would have to be taken, he said, adding that the FBR would now go to the field to make the traders aware of the new scheme. Overall, the FBR received 5.7 million tax returns compared to the total of 8.5 million returns filed in the last tax year. There was a 32% reduction. There were 19 million registered taxpayers with the FBR but only 5.7 million, or 30% of them, chose to file returns.