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IMF cloud over Pak tax evasion

Islamabad, Dec. 23 (Reuters): Nearly half of Pakistan’s lawmakers have reported they pay no taxes, according to a study released today, findings that may endanger billions of dollars in IMF and other loans and aid that shore up a faltering economy.

Cracking down on rampant tax evasion is a main condition of a $6.7 billion IMF programme aimed at stabilising the nuclear-armed US ally of 180 million people. Big donors such as Britain, which has committed more than $1 billion to Pakistani education, are considering slashing aid unless more rich Pakistanis pay tax.

The report, which identifies some ministers among lawmakers who pay no tax, was drawn up by the Centre for Investigative Reporting in Pakistan, an independent research group.

The group based its report on documents from the Election Commission, which publishes financial declarations of political candidates and their statements from the tax authority. Tariq Azeem, a spokesman for Prime Minister Nawaz Sharif’s ruling party, said the tax authorities and the Election Commission used different forms to gather tax data. He said that may explain the discrepancies. Asked why some legislators appeared never to have registered with tax authorities, Azeem said:“I don’t know.” Spokesmen for other parties said they had not read the report and could not comment. None of the politicians the report identified as tax evaders was available for comment.

Pakistan’s public schools and hospitals are starved of revenue while riots over poor public services are frequent. Militant groups capitalise on anger to build support.

Pakistan has a nine per cent tax to gross domestic product ratio, one of the world’s lowest. Fewer than one per cent of citizens file income tax returns. Legislators have a tiny amount deducted from their official salaries but almost all of them have lucrative second careers. The average net worth of a legislator in 2010 was $800,000, according to a study of their asset declarations by the Pakistan Institute of Legislative Development and Transparency. More recent figures are not available.

“If politicians don’t pay taxes themselves, they have lost the moral authority to impose taxes on others,” said Umar Cheema, the author of the report.

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