Pakistani businesses on strike over new taxes

The tax, imposed as part of the International Monetary Fund's $6 billion US dollars bailout package for Islamabad, led to a nationwide strike in Pakistan on Saturday.

Karachi:Thousands of Pakistani businessmen went on a nationwide strike on Saturday to protest against an increased sales tax. The strike was staged at stores, shopping malls and wholesale commodity markets, as well as restaurants and grocers.

In many cities, produce vendors kept their shops closed, to which residents said that it was hard to get fresh fruits and vegetables. Small shopfronts were closed in commercial districts.

Opposition political parties said that the tax was imposed as part of the International Monetary Fund's recent $6 billion US dollars bailout package for Islamabad.

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

In addition to the increasing tax 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 one per cent of its population, crushing trade deficits and a hefty defence budget.

Opposition Senator Mushahid Ullah Khan said that the country was facing hard times because of Prime Minister Imran Khan's decision to bow to the IMF.

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

The IMF, in a statement announced the bailout's approval and said that 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 first disbursement will be one billion US dollars.