AFP, Tehran, Oct 12, 2008 (excerpts) – The Iranian capital’s traditional bazaar stayed on strike on Sunday demanding that a decision to bring in VAT be scrapped, even after President Mahmoud Ahmadinejad froze its implementation for two months.

Stalls were shuttered in the capital’s main bazaar, an AFP correspondent said, with policemen in uniform and plainclothes patrolling the area. The main gate remained closed and shoppers returned empty-handed.

It’s the first general strike at Tehran bazaar, the largest in the capital, since the revolution. The strike started in jewellery shops on Wednesday then spread to textile and carpet stalls reaching its height on Sunday.

“Because of this tax (VAT), there is an increase of 10 to 15 percent in prices, so we want the government to annul the law,” a shopkeeper standing by his closed business said.
“By closing our shops we are losing money for a few days but if we do not succeed we will lose money for ever,” another bazaari said.

“I hope the bazaaris win and not the government, since I would be purchasing things more expensively because of the new tax,” said a dissatisfied consumer.

The value added tax of three percent came into effect on September 22, but after press reports of strikes last week in the provincial cities of Isfahan, Mashhad and Tabriz, Ahmadinejad on October 9 ordered a two-month freeze.

Rises in retail prices have accelerated since Ahmadinejad took office in 2005. In September, the cost of a basket of 45 staple food items was up 50 percent on a year earlier, press reports said.

Annual inflation topped 29 percent in the Iranian calendar month that ended on September 21.

Iran’s bazaars play an important political as well as economic role. Its merchants contributed to the collapse of the shah’s regime during the 1979 Islamic revolution when they went on long strikes.