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Last week’s newsletter discussed the slew of new indirect taxes unveiled in the government’s mini-budget. Indirect taxes disproportionately hurt the poor, so why does the state rely on them so much when a third of its citizens live below the poverty line? The release of our parliamentarians’ tax returns this week gives some clues.
The 2019 tax returns of members of the Provincial Assemblies, National Assembly and the Senate were published by FBR this week, and they illustrate just why Pakistan struggles to raise revenue through income taxes.
Out of 100 senators in our upper house, 20 did not even bother filing their taxes. Another nine paid exactly zero rupees in income tax. Similarly, of 342 MNAs in the lower house, 40 didn’t file income taxes or paid nothing. Of those who did file, 124 MNAs paid less than PKR 50,000 on their annual incomes. In the assembly of our most populous and prosperous province, a scarcely believable 120 Punjab MPAs paid less than PKR 10,000 in income tax. The current Chief Minister Usman Buzdar was one of them, paying a mere PKR 2,000 in 2019. However, even he pales in comparison to Senator Yousuf Raza Gillani, who paid PKR 0.00 in income taxes that year. Please spare a thought for our impoverished former Prime Minister.
Are our legislators underreporting their incomes? I’ll leave that judgement up to you. But when salaried employees earning PKR 100,000 a month are paying more taxes than most of your country’s political elite, you know you have a problem.
KSE-100 rose this week, as investor anxiety subsided over the government’s supplementary finance bill. PKR depreciated slightly this week, due to the release of December’s import numbers. Local gold prices rose marginally this week.
The annual change in Sensitive Price Index rose to 20.08% vs. 20.05% last week, the highest in a decade. The poorest of the country (Q1) were disproportionately affected with a change of 21.38% vs. 20.24% for Q5. On a weekly basis, prices rose for all quintiles by 0.08%.
Increase in prices of Petrol (+2.68%) and Chicken (+4.45%) contributed to weekly inflation. A fall in the price of Chilli Powder (-14.5%), Tomatoes (-18.3%) and Eggs (-2.23%) helped moderate inflation this week.
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