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Published Date: Dec 23, 2013

SDPI Press Release (December 23, 2013)

There is a need for dialogue on taxation reforms in Pakistan, given the
country’s weak fiscal position. This was expressed by Dr. Abid Suleri,
Executive Director, Sustainable Development Policy Institute (SDPI) at
the launch of a report titled ‘Taxation by Misrepresentation’ here today.
The report tracks tax declarations and returns filed with the Election
Commission of Pakistan (ECP) and Federal Bureau of Revenue (FBR)
respectively by legislators across the country (national and provincial
assemblies). Speakers at the occasion also stressed that the Government
should release a tax directory comprising of tax record of all elected
legislators, in accordance with the law.

The research report has
been undertaken by the Sustainable Development Policy Institute (SDPI),
in partnership with the Center for Investigative Reporting in Pakistan
(CIRP). According to the report, 123 legislators and a provincial
financial minister do not even have an NTN number. A total of 461
legislators are classified as ‘non tax-paying’, while those claiming to
pay their taxes are numbered at 550 according to the report. There is no
tax record to be found for 54 elected candidates.

From the
National Assembly of Pakistan, 125 members are classified as
‘non-taxpaying’, including two ministers. In the Provincial Assembly of
Punjab, there are 161 such members, including two ministers; in Sindh,
there are 59 such MPAs, including a serving minister; 80 non-taxpaying
MPAs in Khyber Pakhtunkhwa Assembly, including four ministers, speaker
and the deputy speaker; 36 non-taxpaying MPAs in Baluchistan assembly,
including eight ministers.  Overall, 47% of legislators from all the
assemblies in Pakistan have not filed their taxes, according to the
record of FBR. The highest percentage of non-taxpaying legislators was
found in the assembly of Khyber Pakhtunkhwa.

The report also
highlights that there are large discrepancies in tax record as well as
income declaration of elected legislators in all the national and
provincial assemblies. According to the report “Tax declarations of
several top leaders have been found at variance with FBR data”.
Discrepancy between income and tax declaration and records of the FBR
was found for 26% of legislators from the National Assembly of Pakistan.
Significant discrepancies between declarations of income and tax and
FBR record were also found for Chief Ministers of Balochistan, KPK and
Punjab.

Participants at the occasion also highlighted the need
for change in legislation to ensure tax diligence. Pakistan’s
consistently dismal economic performance has exacerbated the need for
taxation reforms in the country. With an abysmally low tax-to-GDP at
around 9%, Pakistan ranks lower than most comparator economies,
including India, Sri Lanka, Indonesia and Malaysia. While indirect
taxation has increased the burden on the poor of the country, the
privileged ones not only continue to enjoy tax exemptions and amnesty
schemes, but also evade applicable taxes on their incomes.