Iran Press/Asia: The International Monetary Fund (IMF) is insisting that the Pakistani government should adopt some austerity measures, and in particular has asked the government in Islamabad 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 centres including the eastern city of Lahore, Rawalpindi, near the capital Islamabad, and Multan, home to a celebrated ceramics industry.
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.
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.
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.
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. 203/211/201
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