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December 24, 2013

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Some 50% of Pakistani Lawmakers Do Not Pay Taxes

Here in the United States, the federal government is concerned about private individuals evading taxes by putting their funds in offshore accounts. Occasionally, the tax evasion tactics of a politician come to light. But apparently in Pakistan, at least half of all lawmakers don’t even bother to register with tax authorities, let alone pay any taxes.

The Pakistani government has either conflicting comments or no response at all to the report. It is indicated that the average lawmaker makes roughly $800,000 because of lucrative secondary careers, but often pay nothing more than $100 or so in taxes a year. A discrepancy was found even in the tax files of Prime Minister Nawaz Sharif, although it was far less scandalous: his declared he paid $26,000 while the Federal Board of Revenue indicated he paid only $22,000.

Public schools and hospitals are starved of revenue and militant groups have taken advantage of this to gain support and traction while also causing instability. The Finance Ministry has indicated that tax revenue collection has increased by a quarter this year, but it nevertheless obviously falls far short of where it should be. Pakistan is a large debtor to the International Monetary Fund (IMF) and many nations, such as Great Britain, are debating reducing their aid to Pakistan unless they begin to ensure that tax collection increases.

Offshore Accounts/International Tax Disputes