Rejoinder to FBR clarification before PAC on tax cheaters

January 3, 2014

Rejoinder to FBR clarification before PAC on tax cheaters
ISLAMABAD: Our report: “Taxation by Misrepresentation,” has outraged lawmakers who instead of complying with the tax laws summoned the Federal Board of Revenue (FBR) Chairman Tariq Bajwa in the meeting of Public Accounts Committee (PAC) for receiving a clean chit that was ultimately granted.
However, certain facts have been misrepresented in the process that has defeated the purpose of this debate initiated through the findings of the study. I would like to explain them.For beginners, the study was not limited to the National Assembly but also about the lawmakers in the provincial assemblies. There are 1,070 members of all assemblies. We could examine the details of 1,016 of them as record of 54 members was not available. Analysis was based on the nomination papers and the FBR record about the 2012 taxes of the election candidates voted to the assemblies. Entire record is displayed on the website of the Election Commission of Pakistan.
Our research found 47% lawmakers of all assemblies who did not pay income tax; 12% of them did not have NTN, to begin with. There were only 550 members who had declared paying income tax, a claim that was denied by the FBR in case of 43% of members. Two types of discrepancies were noted: 1) the tax payment claimed by a winning candidate was out-rightly rejected by the FBR, showing their zero tax; and 2) the FBR data showed that the amount of tax paid was actually less than what was claimed in the nomination papers.
We also studied the income declarations. Only 680 lawmakers declared income and included among them were 25% those members whose declaration in nomination papers were at variance with the FBR record based on details provided at the time of paying tax.
The report has created uproar. More energy was invested on discrediting the report than rectifying the blunders. I have yet to hear a lawmaker who would sue the FBR for passing wrong information about him to the ECP if there was any. Failing to do so means the FBR record is correct.
A PAC meeting on Wednesday took stock of the situation with an apparent attempt to whitewash the tax cheats of the lawmakers through tax authorities. The FBR Chairman Tariq Bajwa appeared to be a help in doing this. A report in The News Thursday’s edition titled “FBR gives MPs clean chit on tax issue,” quotes the FBR chairman saying: “Income tax of parliamentarians is deducted at source from their salary and is deposited in national exchequer.” He stopped short of explaining that filing electronic income tax returns is a legal obligation.
Let me quote the FBR guideline sent to the returning officers for scrutinizing tax details when nomination papers were being received.“Filing of income tax returns is obligatory if the candidate: 1) enjoys taxable income of Rs350,000 or above….” It further says that “non-filing of IT returns tantamount (sic) to tax default.” One wonders how the chairman showed the audacity to contradict what his department instructed in its guideline.
The FBR chairman is supposed to be aware of the fact that salary is not the only source of income of the lawmakers; just a minor source instead. Even if it is the main source, filing tax return is their obligation. Also, the fact remains that many of the lawmakers were not elected before and their tax record of 2012 is under question.
A contesting candidate has to deposit Rs1.5 million in his account that should be reflected in the nomination papers with account details in order to display his capacity to afford election expenditures. Hardly any Pakistani is unaware that our lawmakers mostly belong to the rich background and spends load of money on electioneering. It is also reflected through their living style that does not match with their tax payments. Even those who pay tax do so less than a salaried person, their record indicates.
PAC did not touch upon the issue of 12% lawmakers without NTN. It is sad to state that one can contest election only by having CNIC and spend millions on campaign without registering for NTN. Anybody interested in purchasing brand new car need NTN. Our lawmakers ride on luxury cars that they do not reflect in their assets as they are mostly purchased in somebody else’s name.
The FBR chairman also downplayed the issue of income and tax discrepancy. A candidate when fills out nomination papers sign this undertaking: “I…..s/o….state that failure to give detail regarding any item of this form shall render my nomination to contest election invalid or if any information given herein above are found incorrect at any time, my election shall stand void ab initio.” Neither returning officers cared to compare nomination papers with the FBR record nor is the FBR willing to question this contradiction.
The FBR chairman proudly told PAC: “Despite pressure from ECP, we did not put up tax details of parliamentarians as these are secret.” They are not secret in fact. One must give credit to the ECP for displaying them on website acknowledging public right to know the truce faces of their representatives.
The government is obliged under Income Tax Ordinance 2001 to release tax directory every year. This is also an obligation under Article 19-A of the Constitution inserted through 18th Amendment that deals with access to information.
Section 216(6) of Income Tax Ordinance 2001 reads: nothing prevents the Federal Government from publishing particulars and the amount of tax paid by taxpayers who are holders of public office as defined in the National Accountability Ordinance 1999 (XVIII of 1999).
Public office-holders, according to the NAB Ordinance 1999, include former and incumbent presidents, governors, prime ministers, chairmen and deputy chairmen Senate, speakers and deputy speakers National Assembly, federal ministers, ministers of state, advisers, special assistants as well as political secretaries to the prime minister, parliamentary secretaries, members of parliament, and auditor generals.
Former and incumbent chief ministers, speakers and deputy speakers of provincial assemblies, provincial ministers, advisers, special assistants, consultants to the chief ministers, provincial parliamentary secretaries, and members of the provincial assembly also fall in the category of public office-holders.
Former and incumbent auditor generals, attorney generals, other law officers (appointed under the Central Law Officers Ordinance, 1970), advocate generals, including additional and assistant advocate generals, are also included among the ranks of the public office holders.
Likewise, Section 216(5) of Income Tax Ordinance 2001 says that FBR can publish a directory of all taxpayers (citizens included), with the prior approval of the Federal Government. Its publication on a regular basis being in furtherance of Article 19A of the Constitution shall certainly help reduce tax maladministration in Pakistan.
However, prior approval of the government is not required for the publication of particulars of taxpayers who are holders of public officer.
The FBR chairman may also be reminded that former Federal Tax Ombudsman Dr. Shoaib Suddle had directed the FBR to release tax directory of public office holders amid excuses from the FBR that doing so will expose them to security risk. Nevertheless, FTO had ruled: “Not only will publications of a taxpayers’ directory have a salutary effect on tax compliance in the country, it will also assist in evolving a tax culture conducive to fair play and democratic values.”
Other than tax law presently enforced, the PML-N has also promised in its manifesto for 2013 elections: “An annual tax directory will be published indicating the taxes paid and assessed during the last 3 years.”
Now all depends on the FBR will that should be complemented by support of the present government that is honour-bound to fulfill its manifesto promise. Instead of portraying false details to save the skins from lawmakers, they should have been told the reality and action must be taken against the tax defaulters.

ISLAMABAD: Our report: “Taxation by Misrepresentation,” has outraged lawmakers who instead of complying with the tax laws summoned the Federal Board of Revenue (FBR) Chairman Tariq Bajwa in the meeting of Public Accounts Committee (PAC) for receiving a clean chit that was ultimately granted.
However, certain facts have been misrepresented in the process that has defeated the purpose of this debate initiated through the findings of the study. I would like to explain them.For beginners, the study was not limited to the National Assembly but also about the lawmakers in the provincial assemblies. There are 1,070 members of all assemblies. We could examine the details of 1,016 of them as record of 54 members was not available. Analysis was based on the nomination papers and the FBR record about the 2012 taxes of the election candidates voted to the assemblies. Entire record is displayed on the website of the Election Commission of Pakistan.
Our research found 47% lawmakers of all assemblies who did not pay income tax; 12% of them did not have NTN, to begin with. There were only 550 members who had declared paying income tax, a claim that was denied by the FBR in case of 43% of members. Two types of discrepancies were noted: 1) the tax payment claimed by a winning candidate was out-rightly rejected by the FBR, showing their zero tax; and 2) the FBR data showed that the amount of tax paid was actually less than what was claimed in the nomination papers.
We also studied the income declarations. Only 680 lawmakers declared income and included among them were 25% those members whose declaration in nomination papers were at variance with the FBR record based on details provided at the time of paying tax.
The report has created uproar. More energy was invested on discrediting the report than rectifying the blunders. I have yet to hear a lawmaker who would sue the FBR for passing wrong information about him to the ECP if there was any. Failing to do so means

the FBR record is correct.
A PAC meeting on Wednesday took stock of the situation with an apparent attempt to whitewash the tax cheats of the lawmakers through tax authorities. The FBR Chairman Tariq Bajwa appeared to be a help in doing this. A report in The News Thursday’s edition titled “FBR gives MPs clean chit on tax issue,” quotes the FBR chairman saying: “Income tax of parliamentarians is deducted at source from their salary and is deposited in national exchequer.” He stopped short of explaining that filing electronic income tax returns is a legal obligation.
Let me quote the FBR guideline sent to the returning officers for scrutinizing tax details when nomination papers were being received.“Filing of income tax returns is obligatory if the candidate: 1) enjoys taxable income of Rs350,000 or above….” It further says that “non-filing of IT returns tantamount (sic) to tax default.” One wonders how the chairman showed the audacity to contradict what his department instructed in its guideline.
The FBR chairman is supposed to be aware of the fact that salary is not the only source of income of the lawmakers; just a minor source instead. Even if it is the main source, filing tax return is their obligation. Also, the fact remains that many of the lawmakers were not elected before and their tax record of 2012 is under question.
A contesting candidate has to deposit Rs1.5 million in his account that should be reflected in the nomination papers with account details in order to display his capacity to afford election expenditures. Hardly any Pakistani is unaware that our lawmakers mostly belong to the rich background and spends load of money on electioneering. It is also reflected through their living style that does not match with their tax payments. Even those who pay tax do so less than a salaried person, their record indicates.
PAC did not touch upon the issue of 12% lawmakers without NTN. It is sad to state that one can contest election only by having CNIC and spend millions on campaign without registering for NTN. Anybody interested in purchasing brand new car need NTN. Our lawmakers ride on luxury cars that they do not reflect in their assets as they are mostly purchased in somebody else’s name.
The FBR chairman also downplayed the issue of income and tax discrepancy. A candidate when fills out nomination papers sign this undertaking: “I…..s/o….state that failure to give detail regarding any item of this form shall render my nomination to contest election invalid or if any information given herein above are found incorrect at any time, my election shall stand void ab initio.” Neither returning officers cared to compare nomination papers with the FBR record nor is the FBR willing to question this contradiction.
The FBR chairman proudly told PAC: “Despite pressure from ECP, we did not put up tax details of parliamentarians as these are secret.” They are not secret in fact. One must give credit to the ECP for displaying them on website acknowledging public right to know the truce faces of their representatives.
The government is obliged under Income Tax Ordinance 2001 to release tax directory every year. This is also an obligation under Article 19-A of the Constitution inserted through 18th Amendment that deals with access to information.
Section 216(6) of Income Tax Ordinance 2001 reads: nothing prevents the Federal Government from publishing particulars and the amount of tax paid by taxpayers who are holders of public office as defined in the National Accountability Ordinance 1999 (XVIII of 1999).
Public office-holders, according to the NAB Ordinance 1999, include former and incumbent presidents, governors, prime ministers, chairmen and deputy chairmen Senate, speakers and deputy speakers National Assembly, federal ministers, ministers of state, advisers, special assistants as well as political secretaries to the prime minister, parliamentary secretaries, members of parliament, and auditor generals.
Former and incumbent chief ministers, speakers and deputy speakers of provincial assemblies, provincial ministers, advisers, special assistants, consultants to the chief ministers, provincial parliamentary secretaries, and members of the provincial assembly also fall in the category of public office-holders.
Former and incumbent auditor generals, attorney generals, other law officers (appointed under the Central Law Officers Ordinance, 1970), advocate generals, including additional and assistant advocate generals, are also included among the ranks of the public office holders.
Likewise, Section 216(5) of Income Tax Ordinance 2001 says that FBR can publish a directory of all taxpayers (citizens included), with the prior approval of the Federal Government. Its publication on a regular basis being in furtherance of Article 19A of the Constitution shall certainly help reduce tax maladministration in Pakistan.
However, prior approval of the government is not required for the publication of particulars of taxpayers who are holders of public officer.
The FBR chairman may also be reminded that former Federal Tax Ombudsman Dr. Shoaib Suddle had directed the FBR to release tax directory of public office holders amid excuses from the FBR that doing so will expose them to security risk. Nevertheless, FTO had ruled: “Not only will publications of a taxpayers’ directory have a salutary effect on tax compliance in the country, it will also assist in evolving a tax culture conducive to fair play and democratic values.”
Other than tax law presently enforced, the PML-N has also promised in its manifesto for 2013 elections: “An annual tax directory will be published indicating the taxes paid and assessed during the last 3 years.”
Now all depends on the FBR will that should be complemented by support of the present government that is honour-bound to fulfill its manifesto promise. Instead of portraying false details to save the skins from lawmakers, they should have been told the reality and action must be taken against the tax defaulters.