Politicians declare much less value of assets

Next govt will have opportunity to implement tax reforms

ISLAMABAD: The election season is in full swing. The political arena has become a battleground where candidates are busy hurling accusations at their competitors and making big promises to voters.

The media is engaged in analysing the data in nomination papers and public scrutiny is greater than ever. Social media has brought the discussion to streets and general public is eager to provide feedback.

Details of assets and the way assets are presented in the nomination papers are very alarming. It is not only the valuation that has surprised the public, but also the valuation methodology for the property.

It has been declared by the PPP leadership that the worth of Bilawal House Karachi is only Rs3 million. The Sharif family has declared the value of their Raiwind residence as only Rs4 million. Imran Khan has put the worth of his Banigala house at just Rs11.47 million.

Maryam Nawaz’s declaration of assets is even more interesting. She has always maintained that she does not own any property anywhere in Pakistan or around the world. Ironically, the jewellery she owns is worth Rs1.7 million leave aside other assets such as land and business.

Another interesting thing found in the nomination papers is that almost all political leaders own vehicles that have been gifted by some unknown sources.

It is astonishing that political leaders do not have resources to buy vehicles despite having properties of millions of rupees. These vehicles are quite expensive which indicates that the people gifting those must have been quite rich.

There must be a limit on the value of goods gifted to the public servants. According to Turkey’s law on declaration of property, gifts or items in the form of grants worth more than the total minimum wage of 10 months at the date of receipt for any reason must be returned.

The attitude of first-tier leadership encourages the second-tier leadership and lower-level candidates of political parties to follow in their footsteps. The second-tier’s nomination papers are not much different in this respect.

They have also declared the value of their property as much lower compared to the market value. This, however, is a crime that stipulates criminal liability for providing false information about income, assets and transactions.

Fake declaration of assets is a crime in two ways. First, the fake valuation of property helps to avoid tax or higher tax according to the true value of property. It also causes a loss to the national revenue.

The tax base is already very limited and is mainly focused on the salaried class. It discourages other segments of the society from paying tax and allows them to look for means to cheat the system as the lawmakers do.

Second, the fake declaration is a moral hazard for the political leadership. Leaders must always lead from the front and by example. Honesty is considered the first and foremost quality for the politicians who have to display that through their role.

Bringing property under
govt control

The filing of such nomination papers has sparked debate on the tax reform bill and the amnesty scheme.

The tax reform bill has a clause under which the government has powers to buy any property that is priced lower than the market value. However, it will have to buy at double the property price.

In this context, it would be a good idea to buy all such low-priced properties in the nomination papers, which can be started with assets of the main political leaders.

The market value of these properties is substantially higher than the prices quoted in the nomination papers. It is projected that their value will be in billions of rupees, though it will take time to arrive at realistic estimates.

Failure on this front will be a disaster for every political party, especially the Pakistan Muslim League-Nawaz (PML-N) that has introduced the tax reform bill.

It enthusiastically promoted it as an instrument that would bring a large number of people under the tax net by encouraging them to declare their assets honestly. Unfortunately, the results did not come.

Even the PML-N political leadership is not honouring its own government’s commitment.

Although the Pakistan Tehreek-e-Insaf (PTI) opposed the tax reform bill, it can now emphasise the need for implementation of the relevant property clause.



It is in line with the PTI vision as it has always advocated for honest politics and declaration of assets according to their real worth. Regrettably, in this case, it is not abiding by the law and is declaring assets much lower than the market value.

The Pakistan Peoples Party (PPP) leadership is also on the same page along with other parties. Its valuation technique is exactly the same as adopted by other parties.

This is not limited to the major parties as small political parties are also moving shoulder to shoulder with the major ones.

A majority of scholars and experts were of the view that tax reforms, which also include amnesty, should not be offered at all with the exception of a few instances. It is assumed that the bill has only been designed to help bigwigs to legalise their money and the country will not benefit at all. It is considered a way to encourage tax avoiders and discourage people from paying tax.



The assumptions are based on the results of previous amnesty schemes. From 2008 to 2018, five such schemes were offered in the hope that the tax base would widen. However, it did not happen and tax return filers numbered just 1.2 million in 2017.

However, this year’s general elections have provided a unique opportunity to set an example and implement the tax reforms according to true spirit of the law. Next government will be in a better position to expand its scope and cover all politicians, bureaucracy, business community and ordinary citizens.



Its failure will be taken as a clear message that it is helping the elite to legalise their assets without asking any question. This time it may not be business as usual as social media is leading the bandwagon to bring about meaningful change.

The writer is the Head of Centre for Future Policy and Head of Research Coordination Unit, Sustainable Development Policy Institute

 

Published in The Express Tribune, July 16^th, 2018.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.