Silence across the streets: Pakistan’s sliding down economy pushes traders on strike for hike in sales tax

Observing a countrywide shutter down strike against the government, the traders in Pakistan stood against the government’s hike in sales tax in federal budget on July 13. The strike was announced by the All Pakistan Anjuman-e-Tajran (APAT) last week. The traders in Karachi, Lahore and Peshawar are also observing a shutter down strike along with those in Multan and DI Khan.

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Pakistan’s slide-down in economy was the major reason for the hike in sales tax triggering a strike across the country. All the market and wholesale markets 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. The main reason cited by the traders indicated that this is because of the government policies creating mistrust in trade and industry adding that traders were already struggling with corrupt tax officials demanding bribes.

Similar strikes were called in other big business centres including the eastern city of Lahore, Rawalpindi, near the capital Islamabad, and Multan, home to a celebrated ceramics industry. 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.

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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.

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The 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.

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.


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