Tax evasion and legislators

Allegation of the Federal Information Minister in a press conference on November 27, 2014 that Chairman of Pakistan Tehreek-e-Insaf, Imran Khan, and other prominent leaders of his party are “tax evaders” has triggered a furious war of words in the media and political circles. In retaliation, Asad Umar, in a Press conference on December 2, 2014, dubbed Information Minister and majority of elected members of Pakistan Muslim League (Nawaz) as tax evaders and looters of public money. One cannot understand why the government, instead of taking action against “tax evaders” across the board has tried to use it as political ploy against political adversaries. It is the duty of Federal Board of Revenue (FBR) to take action against tax delinquents without any political affiliation. The failure to do so amounts to abetment in tax evasion that is a punishable crime under the law.

According to FBR’s Tax Directory for the year ended 30th June 2013, a large number of parliamentarians failed to voluntarily file returns, and even its own 1020 officers did not bother to submit tax declarations-out of about 23,000 employees of FBR, 13,000 had taxable salaries. Tax system is one of the fundamental elements of a constitutional democracy. If elected members and tax administrators fail to discharge their tax obligations, the entire system gets discredited as is the case in Pakistan.

A report released by the Center for Investigative Reporting in Pakistan revealed that in 2011, about 70% of legislators did not file tax returns, but no action was taken against them under the law. Resultantly, in 2013, many of them again entered the national and provincial parliaments. Though many of them enjoy a very high standard of living, none of 1,072 legislators-members of Senate, national and provincial assemblies-qualified among top 100 taxpayers to whom FBR rewarded on the basis of tax declarations for tax year 2013. It is shocking to know that all the legislators cumulatively paid Rs 251 million that is just 0.03% of total direct tax collection, whereas their average net worth is $900,000!

According to Tax Directory (2013)-a public document available at FBR’s website-many who claim to be champions of democracy, vow for supremacy of the constitution and rule of law paid zero tax. Among these luminaries are MNA, Mehmood Achakzai, JI’s head and MPA in Khyber Pakhtunkhwa, Sirajul Haq, Abdul Malik, and Chief Minister of Balochistan and Punjab ex-Minister of Law, Rana Mashhood. Prime Minister Nawaz Sharif paid tax of Rs 2,646,401, Punjab Chief Minister Shahbaz Sharif Rs 3,644,003 and Hamza Shahbaz Sharif Rs 4,383,138. PTI Chairman paid Rs 194,936, Asad Umar Rs 532,918, Shah Mehmood Qureshi Rs 605,500, Arif Alvi Rs 84,303 and Mehmoodur Rasheed Rs 45,500. PML-Q leader Chaudhry Shujaat Hussain paid Rs 1,824,382, Chaudhry Pervaiz Elahi 791,600 and Chaudhry Moonis Elahi Rs 519,455. Sheikh Rashid, the most vocal critic of corruption of government, paid only Rs 58,410.

Senators and MNAs: highlights of tax declarations for tax year 2013 Of the 319 MNAs who filed their tax returns, 108 paid no tax at all. The MNAs who paid less than Rs 100 as income tax include Asyia Naz Tanoli (Rs 88), Tahir Bashir Cheema (Rs 55) and Mohammad Zain Elahi (Rs 72). Eighty-six senators filed their tax returns, out of which three paid nothing to the State!

Out of 89 senators, Federal minister Abbas Khan Afridi from tribal areas paid highest income tax of Rs 17.991 million, while Naseema Ehsan paid lowest at Rs 6,750. Among the senators who paid over Rs 5 million as income tax, Talha Mehmood was highest with Rs 12.940m, followed by Aitzaz Ahsan (Rs 8.763m) and Dr Farogh Naseem (Rs 7.868m).

The senators who paid more than Rs 1 million include Heman Dass (Rs 2.942m), Osman Saifullah Khan (Rs 2.739m), Abdul Haseeb Khan (Rs 2.456m), Malik Rafique Rajwana (Rs 1.207m) and Saleem Mandviwalla (Rs 1.145m).

Although their names exist on the tax roll, 14 senators have not filed their returns.

Three senators also paid income support levy, which was imposed on movable assets in the budget 2013-14. They are Osman Saifullah Khan (Rs 379,247), Finance Minister Ishaq Dar (Rs 2.701m) and Professor Sajid Mir (Rs 21,219).

National Assembly Prime Minister Nawaz Sharif paid income tax of Rs 2.646m but did not pay even single penny as income support levy though he had taxable moveable assets as per declaration filed with Election Commission.

Shahid Khaqan Abbasi paid Rs 1.205m, Obaid Ullah Shadi Khel (Rs 1.256m), Chaudhry Shahbaz Babar (Rs 1.075m), Sheikh Akram (Rs 1.007m), Khwaja Saad Rafique (Rs 1.215m) and Chaudhry Iftikhar Nazir (Rs 1.213m).

As many as 23 MNAs have not filed their returns, but their names were on the tax rolls.

Tariq Christopher Qaiser paid the highest income support levy of Rs 568,859, followed by Sheikh Aftab Ahmad (Rs 19,475), Khawaja Asif (Rs 19,607) and Syed Ali Hassan Gilani (Rs 14,333). The tax directory shows that 16 MNAs from Khyber Pakhtunkhwa, 11 from tribal areas, 38 from Punjab; 21 from Sindh, five from Balochistan, nine females on reserved seats from Punjab, six on reserved seats from Sindh and two from minorities did not pay any income tax.

Source: Parliamentarians’ Tax Directory for year ending 30 June 2013, available at www.fbr.gov.pk Provincial legislators: highlights of tax declarations for tax year 2013

Punjab Assembly Out of the total 353 members of the Punjab Assembly, who filed tax returns, 176 paid no tax. Although their names exist on the tax roll, 18 did not file returns. Arshad Javaid Warraich is the highest taxpayer with Rs 17.696m, followed by Sheikh Alaudin (Rs 11.029m), Punjab Chief Minister Shahbaz Sharif (Rs 3.644m), Chaudhry Raza Ghumman (Rs 3.574m), Ghazali Saleem Butt (Rs 2.839m), Mohammad Siddique Khan (Rs 1.860m, Raja Rashid Hafeez (Rs 1.306m, Zulfiqar Ali Khan (Rs 1.201m), Aamir Sultan Cheema (Rs 1.151m, Mehmood Anwar (Rs 1.412m) and Hashim Jawan Bukht (Rs 1.734m). Ten Punjab MPAs who paid income support levy include Ashraf Warraich (Rs 10,600) Mian Tariq Mehmood (Rs 165,160), Mohammad Akram (Rs 297,592), Khawaja Akram (Rs 297,592) Khawaja Mansha Ullah Butt (Rs 12,924), Rana Abdul Sattar (Rs 12,924), Liaqat Ali (Rs 74,368), Rana Mohammad Afzal (Rs 37,513), Arshad Javaid Warraich (Rs 864,107) and Syed Iftikhar Hassan Gillani (Rs 59,609).

Sindh Assembly Out of the 153 members of the Sindh Assembly who filed returns, 95 did not pay income tax. There are 15 MPAs who did not file returns, but their names exist on the tax roll. Syed Awais Qadir Shah is the highest taxpayer with Rs 18.741m, followed by Moeen Amir Pirzada (Rs 3.476m), Haji Khuda Bux Rajar (Rs 1.784m) and Abdul Rauf Siddiqui (Rs 1.779m). Imdad Ali Pitafi is the lowest taxpayer with Rs 925, followed by Abdul Karim Soomro (Rs 1,000), Ahmad Ali Khan Pitafi (Rs 1,090) and Jam Madad Ali (Rs 1,278). Only Khurram Sher Zaman paid Rs 65,857 as income support levy.

Khyber Pakhtunkhwa Assembly Of the 97 members of the Khyber Pakhtunkhwa Assembly, who filed their returns, 61 did not pay income tax. While their names exist on the tax roll, 27 MPAs did not file tax returns. Noor Saleem Malik paid highest Rs 11.512m as income tax, followed by Amjad Khan Afridi (Rs 3.881m), Iftikhar Ali Mushwani (Rs 3.249m) and Sardar Zahoor Ahmad (Rs 2.028m). Haji Qalandar Khan Lodhi and Shah Hussain Khan paid only Rs 1,000 each. Zia Ullah Afridi (Rs 97,072) and Raja Faisal Zaman (Rs 8, 333) are the two MPAs who paid income support levy.

Balochistan Assembly Out of the 61 members of the Balochistan Assembly, 44 did not pay income tax. Four MPAs did not even file tax returns. Mir Hammal paid highest Rs 1.970m, while Shahida Raouf only Rs 2,000. Prince Ahmed Ali is the only MPA from Balochistan who paid Rs 3,850 as income support levy.

Source: Parliamentarians’ Tax Directory for year ending 30 June 2013, available at www.fbr.gove.pk

Among prominent ministers, Ishaq Dar paid income tax of Rs 824,891, Pervaiz Rashid Rs 20,959, Ahsan Iqbal Rs 11,084, Khawaja Asif Rs 58,719, Saad Rafique Rs 1,215,365 and Chaudhry Nisar Rs 57,124. PPP’s Aitzaz Ahsan paid Rs 8,763,691, Rehman Malik Rs 71,082, Nayyer Bokhari Rs 262,024, Farhatullah Babar Rs 486,901, Farooq H Naek Rs 485,799, Raza Rabbani Rs 316,542, Syed Qaim Ali Shah Rs 33,724 and Babar Awan Rs 628,130. MQM’s Dr Farooq Sattar paid Rs 70,888, Nasreen Jalil Rs 43,331 and Babar Ghauri Rs 396,644. JUI’s Maulana Fazlur Rehman paid Rs 13,462 and Abdul Ghafoor Haideri Rs 43,331. Some other prominent parliamentarians like Mir Hasil Bizenjo paid Rs 31,001, Mushahid Hussain Rs 43,549, Aftab Sherpao Rs 398,131, Ghulam Ahmad Bilour Rs 40,698, Ijazul Haq Rs 160,780, Lieutenant General Abdul Qadir Baloch (Retd) Rs 16,197, Adbul Rashid Godil Rs 25,075, Sharjeel Memon Rs 893,808, Shazia Mari Rs 13,362 and Sharmila Faruqui Rs 36,100.

It is pertinent to mention that in the Finance Act 2013, the National Assembly levied a new tax under the name of Income Support Levy “to provide financial assistance and other social protection and safety net measures to economically-distressed persons and families”. According to ‘Parliamentarians’ Tax Directory for year ending 30 June 2013′, published by FBR on February 28, 2014, only 20 members of Senate, National Assembly and Provincial Assemblies paid this tax. The Income Support Levy Act, 2013 was subsequently repealed through Finance Act 2014. The default of paying this tax for one year when it was in force disentitles all the parliamentarians, who were liable to pay it, to sit in the houses. How unfortunate that even after publication of Tax Directory, neither FBR took any action against them nor anybody moved petitions before competent forum to get them disqualified under the Constitution of Pakistan.

The above portrays a sorry state of affairs. The baffling question is how tax defaulters were allowed to contest election in 2013. Where were the courts and Election Commission of Pakistan? Even FBR kept quiet in the matter. No political party even dares to expel such defaulters from their ranks. Would anyone accept that he/she enjoys a life of luxury with such meagre incomes, on which nominal income tax is paid? In most of the cases declaration is limited to emoluments received from the State as parliamentarians or holders of public office, on which tax is deducted at source. How do they meet expenditures on palatial houses, army of servants and fleet of expensive cars? Nobody-FBR, NAB, Election Commission or Supreme Court-is willing to investigate.

Non-compliance in tax matters, however, is not confined to politicians. All powerful segments of society are guilty. In 2013, only 840,000 returns were received by FBR whereas over 3 million were allotted National Tax Numbers and actual taxable population was not less than 15 million. No action was taken against tax evaders and non-filers. Sadly, over one thousand tax officers, who failed to file tax returns, were not made accountable.

No democratic society can even perceive that its legislators would be tax delinquents. Legislators take oath to protect the constitution. Their sovereign power to levy taxes would stand nullified if they themselves commit violation of tax laws enacted by them! It is not out of place to mention that two important nominees – Tom Daschle and Nancy Killefer – of Barack Obama in his first term withdrew their names after it emerged that they were lagging behind in their tax payments.

Our rulers and political parties, on the contrary, take pride in rewarding known corrupt and tax offenders by giving them important public offices or party positions. This is why our history is that of ‘Barren Years’-phrase aptly adopted as title of book containing editorials and columns by late Mazhar Ali Khan, veteran Pakistani journalist, written as editor of Viewpoint. The agenda of change, even from a pure pragmatic point of view, must start from one’s self and own house. Those who are accusing others of tax avoidance are required to first prove that they have diligently discharged their own liabilities. There cannot be selective accountability and escape from law by using attractive slogans of “change” or defending “democracy.”