IT is a little difficult to say what exactly happened between the government and the trader community, but one thing is clear: the outcome looks very much like a capitulation on the part of the rulers. After a countrywide shutter-down strike that lasted a day and a half, a compromise was worked out that effectively postponed all decisions till January. The composition of the government delegation, which included the PTI’s Jahangir Tareen as the key negotiator, suggests this was more a political solution to the matter than one driven by the economic interests of the state. Clearly, the sight of a shutter-down strike in the middle of the Azadi march was not palatable. On the other hand, the traders had been assured that their demands for replacing the documentation measures in the new tax regime, which is being rolled out by the government after its last budget announcement, with a flat turnover tax would be presented to the IMF for approval. Evidently, this was taken by the traders as a signal that the government was willing to play ball, but that it needed permission from its overlords before making any commitment.

Now we have a very different signal altogether. Postponing everything until January, and allowing political players to enter the negotiations, has sent the signal that this is no longer just an economic issue, but also one whose political fallout is beginning to bite. Hence the entry of Mr Tareen. The trader leadership has assured the government that it will urge its constituents to step forward and pay more taxes, and in return the tax authority will create a ‘committee’, in which the traders will be represented, to hear any specific grievances. One might have considered this as some sort of ‘progress’ to break the impasse had we not seen all this before. The trader community is now notorious for offering more cooperation in the future in return for real gains in the present — gains usually defined as an exemption from whatever tax obligations the government is trying to urge them to accept. They are equally notorious for either reneging, or being otherwise unable to deliver, on these commitments by the time the deadline arrives. In the past, this has meant further talks, followed by fresh deadlines. This is how the status quo has dragged itself out for almost two decades now. So what’s a few months more?

Published in Dawn, November 1st, 2019