Pakistani businesses on strike over new IMF-backed taxes

Pakistani businesses on strike over new IMF-backed taxes
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Motorcyclists ride through a market which is closed due to a strike in Rawalpindi, Pakistan, Saturday, July 13, 2019. (AP)
Pakistani businesses on strike over new IMF-backed taxes
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Pakistani youngsters play cricket at a market which is closed due to a strike in Lahore, Pakistan, Saturday, July 13, 2019. (AP)
Pakistani businesses on strike over new IMF-backed taxes
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A man walks past closed shops at mobile phone market during a shutter down strike called by the traders and business community in Karachi, Pakistan July 13, 2019. (Reuters)
Pakistani businesses on strike over new IMF-backed taxes
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A man walks past push carts in front of closed shops during a shutter down strike called by the traders and business community in Karachi, Pakistan July 13, 2019. (Reuters)
Pakistani businesses on strike over new IMF-backed taxes
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A worker reads a sign on a closed shop during a shutter down strike called by the traders and business community against, what they say is harsh federal budget for the fiscal year 2019-20, and imposition of taxes by the Federal Board of Revenue (FBR) in Peshawar, Pakistan July 13, 2019. Sign reads in Urdu: "countrywide shutter down strike against the IMF sponsored budget and economic murder of businessmen". (Reuters)
Updated 13 July 2019

Pakistani businesses on strike over new IMF-backed taxes

Pakistani businesses on strike over new IMF-backed taxes
  • Saturday’s strike is happening in shopping malls and wholesale commodity markets, small shops and electronics stores
  • In the country’s commercial hub, Karachi, divisions among retailers made the strikes less effective

KARACHI: 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.