Islamabad- Pressure continues on the Pakistani government over tax increases, price hikes and skyrocketing electricity bills as the government seeks a new loan from the International Monetary Fund to revive the country’s battered economy.
Pakistan witnessed a comprehensive strike on Wednesday, as the country’s major cities witnessed the closure of all types of shops.
The call for a demonstration on August 28, which was issued earlier by the Jamaat-e-Islami, coincided with the call for a strike called by the All Pakistan Traders Association, which led to the strike expanding to all Pakistani cities, including Karachi, which is considered the commercial nerve center of Pakistan, and the capital, Islamabad.
Protests and negotiations
In late July, the Jamaat-e-Islami organized an open sit-in in the city of Rawalpindi, adjacent to the capital, Islamabad, demanding that the government implement a number of economic demands to ease the burden on the Pakistani people.
The sit-in put pressure on the government, which expressed its willingness to hold talks with the Islamic Group to end their sit-in.
The sit-in escalated after the first round of talks between the government and the group, with the group’s emir Hafiz Naeem-ur-Rehman calling for the sit-ins to be expanded to major cities including Karachi, where the group subsequently staged a sit-in outside the Sindh governor’s house in Karachi.
Among the most important demands of the Islamic Group are the following:
- Cancel the petroleum tax on all petroleum products.
- Reducing food prices, electricity and gas fees by 20%.
- Renegotiate agreements with independent power producers and end the dollar payment clause.
- Reducing taxes on the agricultural and industrial sectors, in addition to reducing the financial burden on them by 50%.
- Withdrawal of the increase in taxes on workers and withdrawal of taxes on stationery.
After two weeks of Jamaat-e-Islami sit-in, the government and Jamaat-e-Islami reached an agreement on August 9 to end the sit-ins in Rawalpindi and Karachi, with the government accepting the group’s demands, including a review of agreements with independent power producers.
The group’s leader stated that they would “postpone” the sit-in until the government fulfilled the group’s demands, and that they would return to the sit-in unless the government fulfilled its promises.
Back to pressure
The agreement between the government and the Islamic Group stipulated a 45-day deadline for the government to implement its promises, but the Islamic Group’s call for a strike alongside the Traders Association indicates the group’s dissatisfaction with the government’s moves.
In this context, the Ameer of Jamaat-e-Islami, Hafiz Naeem-ur-Rehman, said that the group is ready to ensure that the government will fulfill its promises, and stressed their belief in cooperating with every right step in the right direction.
In a special interview with Al Jazeera Net, Naeem Al Rahman indicated that the 45-day deadline has not yet ended, but efforts must be made by the government.
For his part, lawyer Aqeel Malik, the spokesman for the Pakistani Prime Minister for Legal and Justice Affairs, said that the government sought to expand the tax net to include small and medium traders, with the aim of generating more tax revenues for the government to improve the economy, which is part of the tax reform agenda presented by the government.
Malik, who is also a member of the Pakistani parliament, added in a special interview with Al Jazeera Net that expanding the tax base has angered the trading community in Pakistan, which has led to protests and strikes. Accordingly, we have offered them negotiations to resolve the differences.
Malek pointed out that negotiations with traders are ongoing, as the government has offered to amend the tax policy for small traders only in order not to burden them with taxes.
Malik said that if small traders cannot afford the tax reforms, the government should address this policy and ease it so that these traders can successfully conduct their business and at the same time be part of the taxpayer system.
IMF pressures are reflected on the people
The IMF has long imposed tough conditions on borrowing countries, such as setting specific policies to improve economic systems and structures and imposing taxes on large sectors, which is what is happening with Pakistan now, as the government seeks to meet the fund’s demands to obtain a new rescue package worth between $6 billion and $8 billion.
Aqeel Malik says the government’s view is that we have to widen our tax net and we have to do tax reforms, because it is one of the basic conditions that have to be met to meet the IMF conditions.
Malik pointed out that Pakistan had reached an agreement at the staff level with the Fund to obtain the rescue package, and confirmed that things were going positively within the government’s plans in the new budget that was presented last June.
In contrast, Jamaat-e-Islami leader Hafiz Naeem-ur-Rehman believes the IMF deals are due to corruption, bad policies, bad choices and mismanagement of the government.
Naeemur Rahman pointed out that the agreements with the IMF should not prevent the government from collecting taxes from feudal lords and landowners and reducing the government’s welfare packages.
For his part, political economy expert Osama Radwi believes that it will be difficult to accept all of the group’s demands, because full compliance may affect an agreement with the fund.
Radwi told Al Jazeera Net that some demands, such as reducing the oil tax and renegotiating with independent energy producers, would be difficult for the government due to the legal complications associated with the agreements between the two parties.
Unsatisfactory government procedures:
Speaking about the government’s measures to improve the economic situation, government spokesman Aqeel Malik said the group’s protests were mainly related to rising electricity bills, and we have addressed that, adding, “We have provided support worth Rs50 billion ($179.5 million).”
Aqeel also referred to the relief package offered by the Prime Minister nationwide for those consuming less than 200 units of electricity per month.
Malik confirmed that as for independent power producers, the government has sent a team to all Chinese independent power producers to renegotiate, and he pointed out that renegotiation is still ongoing with them, in addition to renegotiation with local producers.
On economic improvement, Malik said inflation has declined significantly from 38% to 11.2% since the current government took office in March, adding that the cost of basic commodities has also declined and noted that global economic ratings have also improved their outlook on Pakistan.
While the Emir of Jamaat-e-Islami says, “The relief provided by the government is insufficient and has not covered all of Pakistan, but has been allocated to only one province. We demand full relief for the entire nation and will not tolerate procrastination.”
Naeemur Rahman said that due to the IMF packages, the government is unfairly increasing the burden on the working class and industries, which is greatly affecting the businesses, industries and people.
