Panama Papers

Published April 5, 2016

The bombshell has been met with a predictable and swift response. No wrong has been committed and no illegality has been revealed in the so-called Panama Papers, according to the Sharif family itself and government spokespersons who have been activated to defend against the allegations.

In matters of finance and taxation, snap judgements, particularly exonerations, are difficult to make. Whether Pakistani or international laws have been violated through the use of elaborate and secretive offshore companies and banking channels will be known in due course — at least in the international arena.

Inside Pakistan, with the government controlling the tax authority and most of the relevant investigatory bodies, it is unlikely in the extreme that anything untoward will be discovered concerning the prime minister’s family and its financial dealings.

Those implicated in the Panama Papers outside the Sharif family will also likely benefit — few government investigators, with the exception of perhaps NAB, will want the issue to linger in the public domain.

Even if no crime has been committed, the Panama Papers are an indictment of the ruling elite. The collective — the people — delegates the right to make decisions to elected representatives in order to maximise the greater good. But Pakistan’s ruling class is addicted to protecting its own interests and erecting formidable barriers to entry from outside.

Why, it must be asked, do Pakistan’s rich feature so many politicians? The empires they have built suggest a visionary prowess, but only when it comes to their personal wealth and never when it comes to managing the country’s affairs.

Rupee billionaires many times over, many of Pakistan’s leaders seem desperately unable to recreate that magic when they manage public monies and steer public organisations.

The big players in the private sector are little better, always looking for state handouts and competition-eroding state interventions. Pakistan’s rich appear to have perfected the art of reverse redistribution — take from the needy and give to the greedy.

That is the real, and double, tragedy of a self-interested elite. Not only do they hold Pakistan back from realising its economic potential, they impose an ongoing cost on everyone else.

What the Panama Papers reveal are elaborate schemes to avoid taxation and, likely, hide corruption money. That imposes an unjust cost on society. Because Pakistan’s elite avoid direct taxation, the tax structure is skewed towards indirect taxes. And indirect taxes, such as on essential foodstuffs, fuel and basic utilities, put a disproportionate burden on the very people the elected elite are meant to be representing.

So when the Sharif family denies it has done anything illegal, what should be asked of them is, for every rupee of tax avoidance, who is picking up the cost? Surely, the first family should be setting the opposite example and leading on tax compliance. Raiwind is a palatial residence — are spectacular apartments in London necessary too?

Published in Dawn, April 5th, 2016

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