A report identifies tax cheating by Pakistani leaders

ISLAMABAD: A report on tax evasion by Pakistan’s political leaders came out on Wednesday. It said that more than 60 percent of the cabinet and two thirds of the federal lawmakers did not pay taxes last year.

In his study “Representation without Taxation,” investigative journalist Umar Cheema criticises Pakistan’s elected leaders for paying little or no tax, even though their average net worth is estimated to be $882,000.

“The problem begins with those in charge. Those who set tax policies, run the government, and collect taxes have not been able to show others how to do things right “The report is likely to make Pakistan feel more pressure to change its tax system.

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At 9.2%, Pakistan has one of the world’s lowest tax rates to GDP ratios. The Federal Board of Revenues says that only 260,000 people out of 180 million have paid taxes for the last three years in a row (FBR).

Pakistan’s refusal to make significant changes to its tax system was a big reason why an IMF bailout program worth $11.3 billion fell through in November 2010.

Pakistan is one of the countries that gets the most money from the West. However, US Secretary of State Hillary Clinton and British Prime Minister David Cameron have said that it’s hard to give more money when Pakistan’s elite don’t pay taxes.

The report, which marks the start of the Centre for Investigative Reporting in Pakistan, used information from the FBR and lawmakers to conclude. It asks politicians to share their tax returns in the future on their own.

Cheema found that President Asif Ali Zardari and 34 of the 55 members of the cabinet, including Interior Minister Rehman Malik, did not file a tax return in 2011.

For one cabinet minister, no information could be found.

Most of the 20 cabinet ministers who did pay, like Prime Minister Raja Pervaiz Ashraf with Rs142,536 and Foreign Minister Hina Rabbani Khar with Rs69,619, only gave a small amount.

Water and Power Minister Ahmad Mukhtar paid Rs1.09 million, which was the most of any cabinet member. On the other hand, Syed Khurshid Ahmed Shah, who is in charge of religious affairs, paid the least, at Rs43,333.

The report says that of all the members of the upper and lower houses of the federal parliament, 67 percent did not file tax returns in 2011. Only 28 percent did, and 5 percent could not be checked.

It also found that 78 members still haven’t signed up for a national taxation number.

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