Pakistan petroleum dealers strike over new taxes

KARACHI (Reuters) – A number of fuel stations were closed across Pakistan on Friday morning following a strike called by petroleum dealers against a new taxation measure introduced by the government to boost revenue and cover its financial shortfall.

The Pakistani government has set a challenging revenue collection target to help clinch an International Monetary Fund bailout but faces public anger over new taxes, including taxes on dealers, which were introduced in the annual budget last month.

“There is a nationwide strike by dealers and pumps are shut in every city except Islamabad and Rawalpindi,” Abdul Sami Khan, chairman of the Pakistan Petroleum Dealers Association (PPDA), told Reuters, adding that the strike is due to the government’s decision to impose a 0.5% tax on dealers’ turnover.

Khan said it was too soon to give statistics on the number of pumps on strike.

The Petroleum Ministry said in a statement that regulators and oil marketing companies (OMCs) have been advised to ensure that their sites remain operational with sufficient stocks of petroleum products to minimize the impact of strike.

Oil tankers have been allowed to replenish stocks at retail sites during the day on Friday, as opposed to just at night, it added.

“The issue/concerns of PPDA have also been taken up with FBR and Finance Division for reviews/consideration,” according to the ministry’s statement.

Several pumps have chosen to remain operational in the country as dealers remain divided on the call to strike and are hoping to strike out an understanding with the government over the taxes.

“We are not participating in the strike because we were not taken into confidence over this decision. We also have demands that the union should have looked into, but they did not,” said Mohammad Khan, a fuel pump owner in the northwestern city of Dera Ismail Khan.

Pakistan has set a tax revenue target of 13 trillion rupees ($47 billion) for the fiscal year that began on July 1, a near 40% jump from the prior year, and is aiming to bring down its fiscal deficit to 5.9% of gross domestic product from 7.4% the previous year.

While the budget may win approval from the IMF, high taxes on a struggling economy could fuel public anger, according to analysts.

(Reporting by Ariba Shahid in Karachi, additional reporting by Saud Mehsud in Dera Ismail, and Mushtaq Ali in Peshawar; Editing by Anil D’Silva)


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