Pakistani businesses on strike over new IMF-backed taxes

KARACHI, Pakistan (AP) — Hundreds of thousands of Pakistani businesses were on strike Saturday in a nationwide protest against an increased sales tax, which opposition political parties said was imposed as part of the International Monetary Fund’s recent $6 billion bailout package for Islamabad.

The strike was staged at stores, shopping malls and wholesale commodity markets, as well as restaurants and grocers. In the country’s commercial hub, Karachi, divisions among retailers made the strikes less effective.

The strongest participation was in Punjab province, the country’s most populous. In the central city of Multan, even medical stores and small restaurants were shut. In many cities, produce vendors kept their shops closed, which residents said made it hard to get fresh fruits and vegetables. Small shopfronts were closed in commercial districts.

In addition to the tax increase — which kicked in July 1 — traders are now required to document all substantial transactions as part of a government effort to get a picture of the country’s economy.


Pakistan faces dangerously low foreign reserves, a tax base of barely 1% of its population, crushing trade deficits and a hefty defense budget.

The IMF approved the bailout on July 3, saying it would help reduce public debt and expand social spending. The first disbursement will be $1 billion.

Opposition Senator Mushahid Ullah Khan said the financial policies of Prime Minister Imran Khan’s government have been “ill-conceived” and had led to price hikes, depriving people of their basic necessities. He said the country was facing hard times because of Khan’s decision to bow to the IMF.

Government financial managers have repeatedly denied stringent measures in the budget were due to any conditions set by the IMF for a bailout package.

Shabbar Zaidi, chief of the federal tax collection body, has said the measures were intended to streamline the economy and widen the tax base.

The IMF, in a statement announcing the bailout’s approval, said the loan will help reduce public debt and expand social spending. But the IMF has attached some tough terms, including a commitment to let the market decide the Pakistani rupee rate, rather than be supported by the Central Bank. The rupee has plunged more than 40 percent in the last year.


Associated Press writer Asim Tanveer in Multan and Riaz Khan in Peshawar, Pakistan, contributed to this report.

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