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The Pandora Papers created quite a storm upon initial release, as these things tend to. At least 700 Pakistanis were linked to offshore companies in the papers, including senior politicians, retired military generals, media moguls, and none other than our own Finance Minister Shaukat Tarin. A couple of weeks on however, the papers seem to have been little more than a storm in a teacup. Quite simply, this is because they didn’t really reveal anything new.
Offshore companies, if declared to the country’s tax collector (in our case the Federal Board of Revenue), are not illegal. They are, however, a very easy way to avoid scrutiny of ownership and source of funds. So, when the Pandora Papers came along and revealed the extensive offshore holdings of the wealthy and well-connected around the world, it was met with by little more than a shrug from most people—so rich people have been legally gaming the system to avoid paying more taxes, what’s new?
This is the same world where the 25 richest Americans pay lower tax rates than most US workers, and where companies like Amazon receive more subsidies than they pay taxes. Closer to home, agricultural income is exempt from federal taxation—won’t somebody think of the poor feudals, while my personal favourite story from recent years was a Karachi-based woman using the tax amnesty scheme to whiten assets worth PKR 165 billion—congratulations to Pakistan’s first official billionaire, I guess? If all this doesn’t sound right to you, it’s because its not. It is legal though.
KSE-100 rose marginally this week, as the IMF released an encouraging growth forecast for Pakistan in FY 2021-2022. PKR depreciated further this week, amid surging prices of international commodities. Local gold prices fell slightly this week.
The annual change in Sensitive Price Index fell to 12.66% vs. 12.94% last week. The poorest of the country (Q1) continue to bear the brunt of increased prices, with a change of 14.12% vs. 12.77% for Q5. On a weekly basis, prices rose for all quintiles by 0.20%.
Increase in prices of Tomatoes (+19.2) and Lipton Tea (+1.48%) contributed to weekly inflation. LPG (+2.07%) also contributed to rising prices this week. A fall in the price of Sugar (-6.28%), Eggs (-3.80%) and Wheat (-0.91%) helped moderate inflation this week.
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