Anti-tax strike shuts Pakistan shops
May 19 (Reuters)

By Raja Asghar

ISLAMABAD, May 19 (Reuters) - Retailers in major 
Pakistani cities shut their businesses at the start of
a three-day strike on Friday in protest against
the military government's plans to broaden the tax net 
as demanded by international donors.

But the government said it would go ahead with its tax 
restructuring and Finance Minister Shaukat Aziz said 
negotiations were going on with traders to persuade 
them to comply.

Traders said their strike was complete in major cities. 
Interior Minister Moinuddin Haider said 80 percent of 
shops were closed, partly because many have their 
weekly holiday on Friday.

"The government will not step back," he told a news 
conference in Islamabad. "We are firm that we will not give in 
because we are right."

The strike is an act of defiance against a military-led 
government which has made economic reform one 
of its key mandates, but the powerful business
lobbies have faced down governments in the past.

Religious leaders also called a strike urging Moslems to 
stay at home to press the government to implement Islamic
laws and to protest the murder of a Sunni Moslem scholar, 
Maulana Yousuf Ludhianvi, who was gunned down on
Thursday.

The retailers are upset at the plan to impose a retail 
sales tax and conduct an army-led survey to trace 
tax evaders.

"Talks are going on with different groups (of 
traders),"' Aziz told reporters in Islamabad hours after 
the start of the  strike, which shut markets in Karachi, 
the Punjab provincial capital of Lahore and the Punjab
industrial city of Faisalabad. But he did not give 
details.

Most markets were also shut in the capital Islamabad and 
the nearby city of Rawalpindi, where the army's headquarters
are based.

DISSENT WITH IMF

Similar protests by business groups have forced previous 
governments to back away from widening the tax net, 
creating dissent between Pakistan and the
International Monetary Fund, which stalled a $1.56 
billion loan programme last year after Pakistan failed to 
meet agreed targets.

There is no broad-based retail sales tax in Pakistan and 
only one percent of the country's 135 million people pay 
income tax.

Local newspapers reported on Friday that military ruler 
General Pervez Musharraf planned to go ahead with the 
tax survey, due  to begin the last week of this month, 
a first step towards documenting the economy.

"The government is fully committed to stabilise the 
economy and there would be no backtracking," 
Musharraf was quoted as saying by The News newspaper.

But Umer Sailya, chairman of a powerful retailers' 
association, told reporters his members would not
buckle under government pressure.

"The IMF is a threat to our country, even people in 
Washington have launched a protest campaign 
against it," he said.

The strike comes after an IMF mission arrived in 
Islamabad on Thursday to hold fresh loan talks on 
helping fund a three-year  economic programme.

The retailers said the tax opens them up to abuse by 
corrupt tax officials, concerns increased this week by 
the death of a  businessman while being
questioned by tax officials.