ISLAMABAD: More than 60% of Pakistan’s cabinet and two thirds of its federal lawmakers paid no tax last year, according to a report released Wednesday on tax evasion among the country’s political leaders.
The study entitled “Representation without Taxation” by investigative journalist Umar Cheema takes Pakistan’s elected leaders to task for paying little or no tax despite an estimated average net wealth of $882,000.
“The problem starts at the top. Those who make revenue policies, run the government and collect taxes, have not been able to set good examples for others,” said the report, likely to increase pressure on Pakistan to implement tax reform.
Pakistan has one of the lowest tax-to-GDP ratios in the world, estimated at 9.2%. Only 260,000 out of 180 million citizens have paid tax consecutively for the last three years, according to the Federal Board of Revenues (FBR).
Pakistan’s refusal to implement sweeping tax reform was instrumental in the collapse of a $11.3 billion IMF bailout programme in November 2010.
The country is one of the biggest recipients of Western aid – payouts which US Secretary of State Hillary Clinton and British Prime Minister David Cameron have said are difficult to increase when Pakistan’s own elite pays no tax.
The report, which marks the launch of the Centre for Investigative Reporting in Pakistan, based its findings on information from the FBR and lawmakers themselves. It urges politicians to disclose their tax returns voluntarily in future.
According to Cheema’s findings, President Asif Ali Zardari did not file a tax return in 2011 and neither did 34 of the 55 cabinet members including Interior Minister Rehman Malik.
Information was not available for one cabinet minister.
Of the 20 cabinet ministers who did pay, most made only negligible contributions, including Prime Minister Raja Pervaiz Ashraf, with Rs142,536 and Foreign Minister Hina Rabbani Khar with Rs69,619.
The cabinet member who paid the most was Water and Power Minister Ahmad Mukhtar with Rs1.09 million. Religious Affairs Minister Syed Khurshid Ahmed Shah paid the least with Rs43,333.
Among all the lawmakers in the upper and lower houses of the federal parliament, 67% failed to file tax returns in 2011; 28% did and five percent were not possible to verify, according to the report.
It also found that 78 members of parliament are still not registered with a national taxation number.