Pakistan’s problem with tax

Inevitably, it is the poorest in society who lose out from unpaid tax bills.

Inevitably, it is the poorest in society who lose out from unpaid tax bills.

The big political story in Pakistan last week was a report released by investigative journalist Umar Cheema, which found that 70 per cent of parliamentarians did not file a tax return in 2011. On Friday, I spoke to Monocle 24’s Globalist show about the report, and the more general problem of tax avoidance. I’m on from about 10 minutes in.

I also wrote a column on the subject for the Express Tribune, a leading Pakistani newspaper which is affiliated with the International Herald Tribune. The piece looks at the wider issue of tax evasion in Pakistan and why it matters.

To state the obvious, the fact that everyone is at it does not make tax dodging any less reprehensible. Just nine per cent of GDP is collected in tax each year, one of the lowest rates in the world. And Pakistan badly needs revenue. The state is heavily reliant on financial aid from the west and bailouts from international lending institutions. National debt stands at about 60 per cent of GDP, and the government has paid back just a third of the $7.5b that is due to the International Monetary Fund by 2015. With some justification, the population is widely suspicious of US involvement in Pakistan. Yet it is a statistic certainty that many of those complaining are not paying their taxes, thus undermining the best way to reduce reliance on American money.

I am delighted to announce that I’ll be writing a weekly column for the Express Tribune (every Monday).

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