Half of Pakistani lawmakers don’t pay taxes: report
ISLAMABAD: Nearly half of Pakistani lawmakers said they paid no taxes, according to a study released yesterday, findings that could put billions of dollars from the IMF and other loans and aid bolstering a faltering economy at risk.
Crackdowns on rampant tax evasion are one of the key conditions of a $6.7 billion International Monetary Fund program to stabilize the nuclear-armed US ally of 180 million people. Major donors like Britain, which has committed more than $1 billion to Pakistani education, are considering cutting aid unless wealthier Pakistanis pay taxes.
The report, which identifies some ministers among legislators who do not pay taxes, was compiled by the Center for Investigative Reporting in Pakistan, an independent research group. The group based its report on documents from the electoral commission, which publishes the financial declarations of political candidates and their declarations from the tax administration.
Tariq Azeem, spokesman for Prime Minister Nawaz Sharif’s ruling party, said tax authorities and the electoral commission use different forms to collect tax data. He said that could explain the discrepancies.
When asked why some lawmakers never seem to have registered with the tax authorities, Azeem replied, “I don’t know.” Spokespersons for other political parties said they had not read the report and could not comment. None of the politicians identified by the report as tax evaders were available for comment.
Pakistan’s public schools and hospitals are starved of revenue while riots over poor public services are common. Activist groups capitalize on anger to gain support.
Pakistan has a tax-to-gross domestic product ratio of 9%, one of the lowest in the world. Less than one percent of citizens file tax returns.
Legislators have a tiny sum deducted from their official salaries, but almost all of them have lucrative second careers.
The average net worth of a lawmaker in 2010 was $800,000, according to a study of their asset declarations by the Pakistan Institute of Legislative Development and Transparency. More recent figures are not available. “If politicians don’t pay taxes themselves, they have lost the moral authority to tax others,” said Umar Cheema, the report’s author.
The Ministry of Finance said December tax collection was up about a quarter from a year ago. Cheema said nearly 80% of that came from indirect taxes on items like fuel.
“Whenever there is pressure from donor agencies, they just increase indirect taxes, which shifts the burden onto the poor and lets the rich off the hook again,” Cheema said.
Nearly half of all state and provincial lawmakers reported paying no taxes, Cheema said in her report. More than one in 10 legislators had never even registered with the tax authorities.
Of those who paid, a third had discrepancies between income and tax returns and data provided by the tax authorities. Many lawmakers said they paid minute amounts of tax. Many paid less than $100, while others paid as little as $17.
There was even an anomaly in Prime Minister Sharif’s file, according to the report. Sharif, who came to power in the May election, said he paid $26,000 in income tax last year, though the Federal Board of Revenue said he paid $22,000. $.