Two thirds of Pakistan MPs 'dodged income tax'

http://www.telegraph.co.uk

Two thirds of Pakistan's MPs dodged income taxes last year according to a study of rampant tax evasion among the country's political elite.

The majority of political leaders last year failed to submit any income tax returns despite lecturing citizens on the need to improve revenue collection in a country with a yawning financial deficit. President Asif Ali Zardari and Rehman Malik, interior minister, were among those who did not file in 2011 and many of those who did paid negligible amounts. Pakistan has one of the lowest tax collection rates in the world, according to the World Bank, and the government is largely reliant on loans and foreign aid for funding. "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," the report, called Representation without Taxation, said. Anyone earning more than 500,000 rupees (£3,200) a year must file electronic tax returns, but the report found only 90 of 341 members of the national assembly had done so.The study, published by the Centre for Investigative Reporting in Pakistan, found that only 20 of 55 cabinet ministers had filed returns, while 49 senators of 104 paid income tax. Only 856,000 people pay income taxes in the country of about 200 million people and Hillary Clinton has said Pakistan must tax its elite if it wants to continue to get American aid. The government has said it will launch a tax amnesty for three million people if they agree to pay a one-off fine on undeclared income. "This is our effort to bring the hidden wealth into the tax net," Farhatullah Babar, spokesman for Mr Zardari, told Bloomberg earlier this week. "The government is giving this opportunity to tax evaders before launching a meaningful crackdown." But the report said the poor example set by the country's politicians encouraged tax avoidance. "A cursory glance over the tax practices of top leaders may explain the reason behind non-compliance of tax laws by the common citizen. They urge the masses to pay taxes, but do not become role models for them."