Damning indictment: 67% of lawmakers may have paid no taxes at all in 2011

Investigative report says more than 60% of cabinet did not file tax returns either.

ISLAMABAD: A report that brings together taxes and politicians is bound to be explosive.  One that details taxes filed by sitting lawmakers, however, is a strike at Pakistan’s Achilles’ heels.

The country, notorious for having one of the lowest tax-to-GDP ratios in the world at 9.2%, has been reprimanded by donors and world leaders alike for lax tax law implementation.

The phenomenon, however, was brought to the centre-stage on Wednesday with a report that said that more than 60% of cabinet and two-thirds of federal lawmakers did not file tax returns last year.

While non-filing of tax returns does not necessarily mean that the lawmakers did not pay any taxes, it is a violation of legislation, and dents the credibility of the political leadership.

The study titled “Representation without Taxation”, which marks the launch of the Centre for Investigative Reporting in

TERS Pakistan, is the first, official indictment of the country’s leadership.

“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.



Damning findings

According to the 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 Pervez Ashraf, with Rs142,536, and Foreign Minister Hina Rabbani Khar with Rs69,619.

The cabinet member who paid the most was State Minister for Commerce Abbas Khan Afridi, who paid Rs11.5 million last year. Religious Affairs Minister Syed Khurshid Ahmed Shah paid the least, with Rs43,333.

Among all the lawmakers in the upper and lower houses of parliament, 67% failed to file tax returns in 2011, 28% did, and five per cent 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.

Offenders at the top

The report is not just damning for the current leadership. It also cites the example of former dictator, General Ziaul Haq, who, at a Karachi Chamber of Commerce and Industry dinner in 1986, termed tax evasion “a bigger crime than theft”.

Two years later, when his records were probed, taxmen found that he had not filed any returns between 1960 and 1988. His widow subsequently filed the returns. Former premier Benazir Bhutto did not file returns during her premiership in 1993/94 either, the report says, adding that she filed her returns later in 1996.

Nawaz Sharif, chief of his eponymous faction of the Pakistan Muslim League, paid merely Rs5,000 in income tax for three years ending 2007. After searing criticism though, he paid Rs2.5 million in income tax in 2011.

The report based its findings on information from the FBR and lawmakers themselves. It urged politicians to disclose their tax returns voluntarily in future. The report was published with the technical and financial backing of the Islamabad-based nongovernmental organisation Centre for Peace and Development Initiatives, Pakistan.

The report comes after the chairman of the FBR, Ali Arshad Hakeem, offered Pakistani tax evaders a chance to pay around Rs40,000 to have the slate wiped clean in return for committing to pay tax regularly from next year.

Under a new law, yet to be approved by parliament, those unwilling to sign up for the amnesty and pay their taxes will face having assets seized, cell phone connections frozen and could be barred from leaving Pakistan. AFP (with additional input from news desk)

Published in The Express Tribune, December 13^th, 2012.