Khan Tells Pakistan to Stop Paying Tax Until Sharif Goes

Pakistani opposition leader Imran Khan called on his supporters to stop paying tax and electricity bills in a bid to oust Prime Minister Nawaz Sharif as thousands of protesters camped on the capital’s streets for a third day.

Khan gave Sharif two days to resign in a speech last night to crowds that arrived in Islamabad amid heavy rains on Aug. 16 following a 250-kilometer (155-mile) journey from Lahore. Finance Minister Ishaq Dar said International Monetary Fund officials told him they were “surprised” by the protest.

“There’s only one thing all Pakistanis can do and that is to begin a civil disobedience movement,” Khan, a 61-year-old former cricket star, said last night. “We will not pay bills till Nawaz Sharif goes.”

The biggest challenge to Sharif since he took power 15 months ago threatens to derail efforts to revive Pakistan’s finances through a privatization drive and power subsidy cuts while fighting a Taliban insurgency. Sharif has sought to broaden the tax base to meet conditions of an IMF loan won last year, while grappling with Asia’s second-fastest inflation.

The benchmark KSE 100 Index, which lost 1.6 percent last week, fell 0.2 percent today, the biggest loss in a week. The rupee declined about 0.1 percent to its lowest level since March 10.

IMF Surprise

The IMF canceled plans to visit Pakistan for a quarterly economic review, forcing Dar to head to Dubai for the meetings, he told Samaa TV yesterday. In June, the IMF said progress on implementing loan conditions was “mostly positive.”

“The IMF is surprised at what is happening in Pakistan,” Dar said last night.

A group representing 120 associations of small shop owners in Lahore, the country’s second-biggest city, denounced Khan’s call for civil disobedience in a joint statement today.

“We will continue paying taxes,” Ashraf Bhatti, a leader of one of the trader groups, said in a press briefing broadcast on national television. “And we will fly black flags across our markets to renounce Khan’s demands.”

Only 1.2 million individuals and companies in Pakistan file income tax returns, or less than 1 percent of the population, according to the IMF. Sharif’s government this year has increased audits and issued notices this year to 45 parliamentarians who haven’t paid any tax, the IMF said in a report last month.

‘Red Zone’

Khan has threatened to storm a “red zone” that Sharif has declared off limits, including his residence and office, and parliament and foreign embassies. Police said as many as 45,000 protesters joined the protest, while Khan and cleric Muhammad Tahir-ul-Qadri put the figure at 500,000.

“I felt like going into the prime minister’s house, grabbing him by his shirt, dragging him out and holding him accountable,” Khan said last night. In a post today, Khan said Sharif should resign because “I cannot keep these workers calm forever.”

Interior Minister Chaudhry Nisar Ali Khan said the protesters wouldn’t be allowed to enter the red zone, citing a security threat to foreign missions housed in the area. He said the government would set up negotiating committees to meet with Khan and Qadri while blasting their plan to stop paying taxes.

“We ask them to come to negotiating table,” Nisar Ali Khan told reporters last night. “It’s best that we avoid a head-on collision, and that is possible when we engage in dialogue.”

Violence Risk

Sharif’s Pakistan Muslim League party controls 55 percent of parliamentary seats after winning last year’s election in the nation of 196 million people. Khan, whose Pakistan Tehreek-e-Insaf party finished with about one-tenth of seats in parliament, has accused Sharif of vote fraud and says the election commission failed to properly investigate.

Local police deployed an extra 10,000 officers in addition to the 30,000 already guarding the capital after protesting leaders threatened to march into the red zone, police spokesman Naeem Ahmed said. Containers and barbed wire blocked major roads in Islamabad, and authorities cut mobile-phone service in parts of the city.

“If these people violate orders and try entering the red zone then there is a possibility of serious violence which will have widespread repercussions,” said Hasan-Askari Rizvi, a Lahore-based analyst who formerly taught at Columbia University in New York. “That will be something the government will not be able to control.”

Musharraf Support

Khan’s roughly 400,000 supporters are a 20-minute walk from the red zone, according to Khurrum Sher Zaman, a member of Khan’s party. A parallel protest by Qadri, a cleric who leads the Pakistan Awami Tehreek political party, had about 100,000 people a mile away from the heart of the city, according to a statement from his camp.

Qadri, who led demonstrations before last year’s election to demand changes to the electoral system, has said more than 20 of his supporters have died in clashes with police since June and thousands more have been detained.

The protesters were also joined by a party linked to former military ruler Pervez Musharraf, who ousted Sharif in a 1999 coup. Musharraf in March became the first army chief to be tried for sedition in a country ruled by the military for more than half of its 67-year history.

At the protest site, Khan’s supporters waved flags as they danced to music calling for “Change.” Chants of “Go Nawaz, Go!” rung out as Khan spoke to the crowd.

“I can’t feed my family well with my salary -- more than half goes to pay power and gas bills,” Mubeen Ahmed, a salesman at a grocery shop in Lahore, said at the protest site. “So why should they be in power? Let’s try a new person.”

Before it's here, it's on the Bloomberg Terminal.