Consistently inconsistent

When it comes to policy making, the Pakistani government has proved to be consistently inconsistent. It is clear from recent happenings that people are well aware of the fact that governments decision can fly-by-night. This shifty behavior of government has shaped the thinking patterns of the nation which consequently is affecting businesses.
The local manufacturers of tractors are victims of one such policy (in)decision where the problem is not whether the decision is good or bad for the majority; but whether the government will stick to its plan or not.
According to industry sources, the tractor manufacturers experienced a sharp decrease in demand when in June the President of Pakistan announced that farmers with landholding of less than 12.5 acres would be exempt from the payment of sales tax. Sources reveal that a committee was also formed to look into this matter.
When this tax was imposed, in March 2011 tractor sales had tallied to 5,032 units but in July (a month after the Presidents announcement), only 1,036 units were sold.
The sales of tractors fell from 9,105 units in the July-August 2010 period, to 1,993 units in July-August 2011 period; this decline in sales is due to the imposition of 16 percent sales tax which has pushed up the prices of tractors by about Rs100,000 to Rs200,000 per unit.
Oddly, the drop in sales appears to have less to do with the increase in the prices of tractors, compared to the general sentiment among people that the government would reverse its decision, which consequently would bring down prices. Keeping this in mind, we can assume that this decrease in sales is temporary and is due to the postponement of purchases, rather than substitution of local tractors.
This idea is supported by the fact that upon analysis of the automobile industry in general, we see the increase in sales of cars and 4x4s despite increase in prices is backed by the surge in rural demand due to good support prices set up by the government. The argument is further strengthened by the fact that the price of urea is twice that in August 2010, but the demand for urea has not seen a drastic decline.
According to industry sources, the imposition of sales tax on tractors was done to generate tax revenue of around Rs7 billion which would be collected but with a delay since government is aware that this decrease is temporary and eventually people would buy tractors at the higher prices, because imported tractors are still much more expensive.
On the other hand, the buyers are expecting the government to come true to the words of the President and reduce, if not eliminate the tax on tractor purchases. Someone ought to remind these expectant farmers that promises are made to be broken!
It is clear that the government is suffering because of its own inconsistent policies and that the drop in tractor sales could have been avoided if the government had taken a policy stance and stuck to it.