By Syed Raza Hassan
KARACHI, Pakistan (Reuters) – Markets and wholesale merchants across Pakistan closed on Saturday in a strike by businesses against measures demanded by the International Monetary Fund to crack down on tax evasion and bolster the country’s depleted public finances.
In Karachi, the country’s main commercial city, around 80% of markets dealing in bulk goods were closed, said Atiq Mir, president of the All Karachi Traders Alliance, which represents hundreds of markets in the city.
“Government policies have created mistrust in trade and industry,” said Mir, who added that traders were already struggling with corrupt tax officials demanding bribes.
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 celebrated ceramics industry.
Not all business associations joined the strike but the move underlines the pressure 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, like so many of its predecessors, it is having to impose tough austerity measures having been forced to turn to the IMF for Pakistan’s 13th bailout since the late 1980s.
In Karachi, calm prevailed around the main electronics market in the old city that would normally be bustling on a Saturday with traders selling everything from mobile phones to televisions, refrigerators and air conditioners.
A popular textiles market on Tariq Road in another part of the city was also closed as traders, already struggling to attract customers hit by a sliding rupee and inflation running at around 9%, shut up shop for the day.
Under the IMF bailout, signed this month, Pakistan is under heavy pressure to boost its tax revenues to plug a fiscal deficit which has ballooned to around 7% of its gross domestic product, as well as avert a looming balance of payments crisis.
The South Asian country has long suffered from a weak tax base, with only about 1% of its 208 million population filing income tax returns and key industrial sectors dominated by powerful lobbies that pay little or no tax.
Among the measures which have roused the anger of traders is a new rule that would require customers buying items worth 50,000 rupees ($315) or over to produce identity documents, a move intended to help authorities to track tax evaders.
“The new condition of the national identity card on purchases of 50,000 rupees or more has created harassment among the people,” Mir said.
Under the measures agreed with 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.
“We want zero tax on small retailers. Sales tax should be limited to the manufacturing sector,” Mir said.
The strike, which follows isolated protests by traders this month, was called after the government refused to agree to the traders’ demands to abandon its tax plans.