Springing leaks

Out of my head

Yes, yes – the Sharifs have to explain why they aren’t badmaash, So do all of the other shareefs of the country whose names have popped up in the so-called Panama leaks. Some will be able to explain the sources of their income and many won’t.

Let the investigations take place, let the joint task forces be formed, let bipartisan parliamentary committees be put together and let the report(s) come out and let the chips fall where they may. I just won’t be holding my breath for these reports to see the light of day (probably won’t happen in my lifetime) and for any individuals to be made answerable (will never happen – the stack of chips will remain upright). But, come on, now – were any of you really surprised by the Mossack Fonseca revelations?

If we saw all the huffing and puffing (our talk show hosts and their expert panels practically went blue in the face in their righteousness), joke sharing, and finger pointing that went on in our public forums, our Whatsapp groups, and our drawing rooms conversations it would seem the heavens had burst, lightning had flashed, and a great truth had been revealed. Some new and great proof of criminality and corruption against our political leaders (let’s not forget that the list also included names of our captains of industry and our media magnates, amongst others) had emerged.

It was nothing of the sort. We’ve known many of our leaders (and not just of the political kind) are corrupt and have been corrupt for a long time. There’s no end to their greed either. So they are always going to want more – and more.

Back in 2013, right after the results of the 2013 elections had come in, Maryam Nawaz had said in reply to a foreign journalist’s query on television as to what such a large majority in parliament meant for her father and what he intended to do: “You know, this time, I think he really means to do something for the country.”

The emphasis on the word ‘this’ was loud and clear and was also a damning, if unwitting, assessment of her father’s first two stints in power. However, did anybody really believe the then presumptive first daughter when she said ‘this’ time would be different? If you did, what were you smoking?

The Sharifs aren’t the only greedy ones, though. Many of our leaders (and, to repeat, not just of the political kind) have ravenous appetites. We know this already. So let’s ask ourselves another question. How different is the rest of the country?

There are an estimated 6.3 million adult Pakistanis who are middle-class (or above) – that is, with a wealth of $10,000 or more. Now how many of them actually file income tax returns, do you think? Six million? Three million? Two million? One million? No. No. No. And no. There are only 900,000 income tax returns filers and, worse, 400,000 of those declare nil returns. So there are only half a million taxpayers in a country of 180m and only about eight percent of those who should be paying taxes (the rich and the middle-class) are doing so. No wonder Pakistan’s tax-to-GDP ratio (9.4 percent) is amongst the worst of all countries.

Sure, sure – make all the excuses that you want (‘we already pay so many indirect taxes’, ‘why should I pay taxes when all those thieves in the government will steal everything’, ‘what do I get in return for my taxes’...).

But do remember that even when Socrates was found guilty in a flawed trial and sentenced to death for corrupting the minds of the youth of Athens and of impiety (‘not believing in the gods of the state’) he refused to escape when given an opportunity to do so and, instead, calmly submitted to his sentence and drank his poisonous potion of hemlock.

He was not above the law even if the law was an ass. If he had chosen to live in Athens he was expected to abide by the city-state’s laws and he would do so even if the laws went against him. Even if it meant his death.

As for indirect taxation? It puts – proportionately – a much greater burden on lower-income groups. So if people actually paid their income taxes there would be less of a need for indirect taxation and the less well-off would be able to breathe a little easier. But, according to the recent report by the Tax Reforms Commission (TRC), Pakistan’s tax regime – like much else in this country – is heavily tilted in favour of the elite. “In Pakistan, it seems the poor are subjected to heavy and harsh indirect taxation and the elite are enjoying free perquisites and benefits, including purchase of valuable state-owned plots at prime locations and at throwaway prices”, says the report.

The TRC has recommended the withdrawal of tax breaks to the president, governors, chiefs of staff and corps commanders (ahem!), and cabinet ministers, to ensure equity. But these power-brokers aren’t the only beneficiaries of this inequitable system.

It behoves the rest of us to do our bit too and that includes paying our taxes and declaring our assets. Even the half a million of us who do pay our taxes and the other 400,000 who declare no income – how many of us show all that we own in our returns?

Come on now, you probably know enough people other than the usual suspects who have properties and accounts in Dubai, or the UK, or the US, Do you think all of their assets show up in their wealth tax returns? Do even all their domestic assets show up?

Investigate the leaks, sure. But the Panama leaks are only the tip of the iceberg and, really, they didn’t tell us anything we didn’t know already. What is really needed is an overhaul of the tax system such that you plug most of its leaks. As they say, prevention is better than the cure. I’m being a bit simplistic, sure, but before we go all hog-wild over the Panama Papers let’s take a look in the mirror too.

Pakistan’s been leaking – nay, bleeding – it’s wealth from the very beginning. Along the way most of us have contributed to the sinking of the ship.

The writer is a freelance columnist.

Email: Kmumtaz1@hotmail.com

Twitter: @KhusroMumtaz