Prime Minister Shehbaz Sharif has every right to feel hard done by. His entry into politics as President of the Lahore Chamber of Chamber and Industry, but instead of supporting its only former President to have become Prime Minister by refusing to take part in the shutterdown strike on Friday, it joined the other chambers in closing down business all over the country. The strike had been called by the chambers to protest the powers given to taxation officials to arrest businessmen in the recent budget. After an initial outcry, the Prime Minister personally intervened to place restrictions on these powers, but the business community was dissatisfied. Talks with PM’s Adviser Haroon Akhtar Khan led to the hope of a postponement, but the business community went ahead with a one-day strike.
Mr Sharif may have forgotten why the chambers and associations exist: to not pay taxes. The IMF has tightened the screws on in many areas, but seems to have fallen in with the Federal Board of Revenue’s opinion that the only way to make these businessmen cough up was to throw them into durance vile. The psychology is devilish; a businessman who has suffered the indignity of being arrested will be ready to declare income or sales that will get him released. It should not be forgotten that the power to arrest means an addition to an already vast repertoire for extracting money. Even the threat of arrest is enough to make a businessman cough up.
The government has two issues to address. First, the business community’s fear of the taxman, which is the reason for the existence of the associations and chambers of commerce. Second, the output in the shape of what is done with the taxes once they are collected.
At the same time, the government must never forget that no one likes to pay taxes, just as no one likes having a tooth pulled without anesthetic. How the business community is to be persuaded to pay their fair share is probably best managed by Mr Sharif, who was a business leader. At the same time, he must also reassess whether his party can continue to rely so heavily of a community which is doing so much to make it difficult for the government to rule. At the same time, Mr Sharif must also think about whether foreign investors might find themselves subject to the same harassment as the local business community feels.
