Traders on strike across Pakistan over new IMF-proposed taxes

KARACHI: Markets and wholesale merchants across Pakistan remained shut on Saturday in a strike against what traders have called ‘unjustified measures’ taken in the federal budget announced by the government last month, ostensibly as part of prior actions prescribed by the International Monetary Fund’s recent $6 billion bailout package.
While not all business associations joined the strike, the shutdown highlights the pressures facing Prime Minister Imran Khan’s government, which came to power last year promising millions of new jobs and welfare measures to help the poor. Instead, it is having to impose tough austerity measures after being forced to turn to the IMF.
Kashif Chaudhry, the president of the Markazi Tanzeem-e-Tajran Pakistan (Central Organization of Traders), called the strike a “historical” one, saying markets were closed from the northwestern Khyber Pakhtunkhwa province all the way to Karachi, the capital of the southern Sindh province.
“Closure [of markets] on a single day costs the country Rs4 billion only in the city of Karachi,” said Atiq Mir, chairman of the Karachi Tajir Itehad, an umbrella group of the city’s trade associations. “Accumulated losses would be around Rs50 billion across the country.”
Traders say they are striking against a complex new system of value added taxes, discretionary powers of tax officials, a complicated income tax system and unreal tax rates. Under the measures proposed by the IMF, the government has also agreed to close loopholes and preferential rates in sales tax on sugar, steel, edible oils and medium and large retailers, hitting many businesses.
Traders are also protesting a new condition imposed by the government that customers who spend more than Rs50,000 will have to present National Identity cards.
Shabbar Zaidi, the chairman of the Federal Board of Revenue, Pakistan’s main tax collecting agency, said on Friday the condition to present ID cards would help the government identify tax dodgers in a nation where less than 1 percent of the population of 208 million even files income tax returns.
Responding to the protests, de facto information minister Firdous Ashiq Awan said the government was ready for negotiations and considered traders its partners, but warned those who were protesting due to a “political agenda.”
“We have no political ambitions, our cause is only the traders’ cause,” Kashif Chaudhry of the Markazi Tanzeem-e-Tajran Pakistan said. “We have offered talks many times and we are still ready to talk.”
Traders in Karachi, the main commercial hub of the country, said 90 percent of the city’s wholesale markets were closed, causing the city billions in losses.
Similar strikes were called in other big business centers including the eastern city of Lahore, Rawalpindi, near the capital Islamabad, and Multan, home to a major ceramics industry.