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Pakistan: Tax authorities publish list to embarrass cheats into paying up

Wednesday, 16 April 2014   (0 Comments)
Posted by: Author: Reuters
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Author: Reuters and Web Desk

Desperate tax authorities are publicly shaming defaulters by publishing their tax details in a directory for the first time, officials said on Wednesday.

The cash-strapped authorities find it almost impossible to chase down the large number of defaulters — many of them powerful politicians — through the country’s moribund courts.

Only around one in 200 citizens files income tax, leaving the state begging foreign donors to help fund crumbling public schools and hospitals.

The tax directory of all taxpayers was published by the FBR, which has already unveiled the tax directory of parliamentarians that shows meagre contribution by the legislators.

According to the tax directory, Finance Secretary Dr Waqar Masood Khan paid Rs640,246 in income tax last year.

Minister of Planning, Development and Reforms Ahsan Iqbal paid a meagre amount of Rs11,000 in income tax last year.

FBR’s Inland Revenue Policy member Shahid Hussain Asad, who directly deals with income tax issues, paid Rs227,015 in income tax. Yasmin Saud, the FBR member, paid Rs436,721 in income tax, Riffat Shaheen Qazi, another FBR member, paid Rs477,612 in tax and Shahid Hussain Jatoi, FBR member, paid Rs236,383 in tax.

So far, there’s little been political will to improve tax collection, since most legislators and many ministers have been tax evaders too. Reformists hope publication of the directory marks a change of policy.

"We hope this will become the talk of the town,” said Shahid Asad, the spokesperson of the Federal Board of Revenue. "People will be living these luxurious life styles and others will be saying to them – where is your name on that list?”

Cracking down on tax evasion is a key condition of a $6.7 billion loan from the International Monetary Fund intended to prop up Pakistan’s dwindling foreign reserves.

The cash is being doled out in increments and should stop if Pakistan fails to institute reforms.

Directory publication signals that Finance Minister Ishaq Dar is serious about tackling the problem, says a local journalist who published reports which showed that nearly 70 percent of lawmakers did not file taxes in 2011 and around half did not file in 2012.

The publication of the directory makes Pakistan the fourth country in the world – after Sweden, Finland and Norway – to publish the details of all individual and corporate tax payers. Citizens have until May 15 to dispute the records.

But some reformists doubt that public shaming will be enough to provoke payment in a country where most of the wealthy are tax cheats. They are calling for prosecutions – no one has been jailed for income tax evasion for more than 25 years.

"By publishing this figure, they can’t say they have done their job. They should pinpoint tax offenders, start an investigation and prosecute them,” said Ikramul Haq, a professor of tax law and Supreme Court lawyer.

"Otherwise what is the purpose of publishing this list? It is just wasting time.”

Many judges, generals and legislators were not on the 17,000 page list, he said, underscoring the deep-rooted interests that prevent reform.

But the country’s problems go beyond just collecting more taxes, said Nadeem Haque, a former deputy head of the country’s Planning Commission.

Officials waste huge amounts of public funds on perks, ceremonies and land for themselves, he said. If given more cash, they would probably splurge on more luxuries, he said.

"We have to build society and institutions. Tax is neither here nor there,” he said.

"Without reform this system will remain intact and stifle the poor, who have only two choices: migrate or join some revolution that disrupts this system.”

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