Strike solid in Pakistan

Two striking traders in Peshawar share a pipe

By Owen Bennett-Jones in Islamabad

The three-day strike by traders in Pakistan - now in its second day - is still receiving an overwhelming response.

The strike has been called to protest against the plans of the military authorities to impose a general sales tax on retailers.

Reports from all the major cities indicate that the overwhelming majority of shops have closed down.

A few stores, especially in some residential areas, have remained open and the traders organisations have exempted all chemists from the strike, so that people can get emergency medical supplies.

But for the most part the traders organisations have secured a solid response from their members.

No doubt

Commenting on the first day of the strike, Pakistani Interior Minister Moinuddin Haider argued it was difficult to assess how many people were refusing to open their shops because some shopkeepers treat Friday as a holiday.

He said the picture was also complicated by the fact that there was a local holiday in the province of Sind.

But since the second day of the strike has fallen on a Saturday, which is a full working day in Pakistan, the minister can now be in no doubt that most traders have decided to express their opposition to the sales tax.

Tax base

The government says it must raise the tax as it needs to increase the tax base in Pakistan.

Currently, only 1.5 million of the country's 140 million people pay any tax at all.

The traders, though, say they should not have to bear the cost of collecting the sales tax.

Many believe that in reality the traders are afraid that if they document all their transactions, so that the sales tax could be calculated, that would give the tax authorities a better idea of the size of their businesses and make it more difficult to avoid income tax.

Whatever the traders' motivation, one thing is clear: both sides are in entrenched positions and saying they won't compromise.

The general sales tax has consequently become a major test of the extent of the military's resolve to introduce unpopular long-term reforms.