Pakistan politician pays £10 in taxes

Super-rich politicans are paying minicisule amounts of tax in Pakistan, if they pay tax at all

By Rob Crilly

Almost half the members of Pakistan’s national and provincial parliaments did not pay any tax last year, according to the latest survey of MPs’ finances. More than one in 10 does not even have a National Tax Number and even those that do pay up offer paltry amounts. Although the results are an improvement on last year’s numbers, the figures will cause outrage in an impoverished country where a third of the population survives on less than 30p a day and will anger donors who provide billions of pounds for basic services. British aid to Pakistan has soared in the past two years and earlier this year MPs recommended that the government only increase payments further if Pakistan improves its collection rate. The report will raise awkward questions for many of Pakistan’s richest and most powerful figures.

Nawaz Sharif, the prime minister who comes from a wealthy family which made its fortune with steel mills and lives on a vast estate with more than 100 peacocks, declared that he paid about £15,000 in income tax last year.

Other politicians said they had paid as little as £10.

Tackling corruption is also a key requirement of a recent £4billion International Monetary Fund loan package designed to shore up the country’s failing economy. The new report, published by the Centre for Investigative Reporting in Pakistan, used data collected from the Election Commission, which publishes financial declarations from political candidates. The drop in non-payers – from two thirds in 2011 - suggests that either scrutiny has forced more to file returns or that elections this year, in which the Pakistan People’s Party was defeated by Mr Sharif’s Pakistan Muslim League (PML-N), may have cleared out some of the most corrupt politicians. However, Umar Cheema, the report’s author, said the high level of tax evasion and avoidance through amnesties and exemption, meant more of the burden fell on the poor who could not escape indirect taxation. “This tax evasion culture is practised within Parliament and subsequently prevails in all sections of society,” he wrote. “When law-makers would not pay tax, they lose moral authority to pressurise others for the compliance of laws.” As a result Pakistan has one of the lowest collection rates in the world with only about 9% of its gross domestic product collected as tax – compared with about 36% for the UK. Less than 1% of the population file income taxes. Meanwhile Britain’s Department for International Development has increased aid in order to stabilise the country, pouring more than £1billion into Pakistan over five years, mostly for its crumbling school system.