Pakistan’s fat-cat bankers may finally be on the hook to fork out part of the bonanza of profits they have been pocketing since the onset of the Covid-19 global pandemic.
By Muhammad Ali
ISLAMABAD: Pakistan is considering a windfall gains tax on the fat profit margins earned by banks fishing in the troubled waters of the volatile currency market against the backdrop of a plummeting rupee over the last couple of years.
A proposal to this effect is due to be considered at a Pakistan Federal Cabinet meeting here Wednesday.
Pakistani authorities first considered a windfall tax on bank profits after Prime Minister Shehbaz Sharif rose to power in April 2022. The proposal was rationalised in view of the oversized margins pocketed by banks during the market upheaval caused by the Covid-19 global pandemic. The proposal, however, is said to have been shot down by the International Monetary Fund (IMF).
Sharif’s rise to the PM house was followed by widespread political instability, giving rise to large-scale currency speculation, leading to a slide in the value of the Pakistani rupee. This created an environment that enabled banks engaged in currency exchange business to make hefty profits.
Under PM Sharif, the Parliament adopted a measure to empower the Federal Board of Revenue (FBR) to impose a windfall gain tax wherever it found exorbitant profits by any sector. It is in view of that measure that the caretaker government is considering the proposal again.
Copyright © 2021 Independent Pakistan | All rights reserved
