Report: Most Pakistani lawmakers do not file taxes

AP News
Posted: Dec 12, 2012 3:02 PM

ISLAMABAD (AP) — The majority of Pakistani lawmakers do not file tax returns despite a legal requirement to do, a report said Wednesday, reinforcing concerns about the low level of tax revenue in the country.

Pakistan has one of the lowest tax-to-GDP rates in the world because payment is not well enforced, and major areas of the economy, such as the agriculture sector, are either taxed at very low rates or not at all.

Around two-thirds of the country's 446 lawmakers failed to file tax returns in 2011, the latest data available, said the report, co-published by the Center for Investigative Reporting in Pakistan and the Centre for Peace and Development Initiatives.

A similar percentage of the government's 55 Cabinet members also failed to file returns, said the report, titled "Representation Without Taxation." Among those politicians who failed to file a return was Pakistani President Asif Ali Zardari.

Even lawmakers who filed returns often paid very low amounts of tax on outside income. The lowest-paying lawmaker who filed a return, Senator Mushahid Hussain, paid less than $1 in taxes, said the report.

The figures do not take into account the tax paid by lawmakers on their official salaries, which is automatically deducted. It instead focuses on declarations of supplemental income from land, businesses and other sources of revenue.

Analysts have said that the country's effective tax rate is so low because a small elite, comprised of the military, land owners and the rising urban upper and middle classes is reluctant to give up any of its wealth. These groups either put pressure on lawmakers or are the lawmakers themselves.

"End result is the erosion of public trust in the government that is frequently blamed for serving the interests of the rich and powerful at the expense of the poor and low-income groups," the report said.