FOCUS
When the world’s top political and business leaders were gathering in the Swiss city of Davos last week to ponder over ways to fix economic woes of the world, the Oxfam International sent out a blunt message to the wealthy people – Don’t dodge taxes.
According to Oxfam, an international confederation of charitable organizations focused on the alleviation of global poverty, just eight men own the same wealth as the 3.6 billion people of the world who make up the poorest half of humanity.
Though some of them have made the fortune through talent and hard work, over half of the world’s billionaires either inherited their wealth or accumulated it through industries prone to corruption and cronyism.
In the poverty-stricken India alone, the one percent richest own 58 percent wealth of the entire country.
And there seems to be no end to this lust for grabbing more money. The Oxfam believes that the world could see its first trillionaire in just 25 years, meaning that he would need to spend one million dollar day for 2,738 years to spend his fortune.
There is no easy answer to the question that how this growing inequality gap between the rich and poor could be checked but Oxfam pleaded the super-rich to pay their taxes honestly that could be spent on the welfare of the poor.
“Don’t dodge taxes in your own countries, or in countries where you invest and operate, by using tax havens,” it said in a letter addressed to the billionaires.
“Any companies you own or control should release detailed financial information about activities in all the countries they operate – including tax havens – so that the public can judge whether your companies truly pay taxes where they do business. You should make public the investments in companies and trust for which you are the ultimate beneficial owner.”
Tax dodging by the rich is being touted in recent years as one of the major reasons behind the widening of the inequality gap in the world as governments do not get enough money to spend for the welfare of the poor.
The Panama Papers leaks published last year were just the tip of an iceberg showing how wealthy people of the world put their money in tax havens to avoid taxes which were supposed to be spent for poverty alleviation.
“The Panama Papers showed the world how the crooks of this world stash away their money,” Swiss anti-corruption expert Mark Pieth said while taking part in a discussion on combating and ending corruption at the World Economic Forum.
Pieth along with Joseph Stiglitz, an American Nobel Prize-winning economist and professor at Columbia University, who was part of the Panama Papers probe, also participated in the debate and they together produced a 25-page report on “Overcoming the Shadow Economy” at the forum.
It is unfortunate that while internationally a campaign is being launched to effectively deal with dirty money which is hampering efforts to ameliorate the lot of teeming millions, no such serious effort is being made in Pakistan to tackle this issue domestically.
The Panama Papers leaks – which revealed names of 400 Pakistanis, including the scions of Prime Minister Nawaz Sharif – have been reduced into a political point scoring issue.
Apart from making political gains from this issue, the two sides – opposition and treasury -- should have used the Panama Papers leaks as an opportunity to make country’s accountability laws more effective to check corruption and tax evasions but none of them is giving any attention to this.
As international efforts are gearing up to crackdown on untaxed money invested in the tax havens, critics say the government is trying to launch an tax amnesty scheme to let rich Pakistanis who have stashed their money in these havens to bring it back to the country.
Though the government’s legal wizard Zahid Hamid earlier this month told the Senate that the government has not yet finalized its plans to offer such amnesty, the government officials are hinting that the option is still under serious consideration.
He said it is being done in view of the growing demands of country’s businessmen who wanted to bring their money back to their country.
Finance Minister Ishaq Dar endorsed these views while addressing leading businessmen of the country in Karachi last week.
“We have to take measures to create congenial atmosphere in the country to encourage our people to invest their money in the country and the government is fully determined to carve out such environment for our businessmen,” he said, adding,” let bygones be bygones”.
He said Pakistan has become 104th member of the Organization for Economic Cooperation and Development (OECD) last year.
Being member of the OECD, Pakistan is obliged to share information with its members on the tax status of the people who have invested their capital in these countries and vice versa.
“In the next few years, keeping of money in tax havens without furnishing information about the tax status would become very difficult,” he added.
But critics say the government needs to examine the results of previous amnesty schemes before it announces a new one. The present government has announced three such amnesty schemes over the past three years and critics say they failed to achieve the desired results.
The government officials have hinted that if their rivals resisted their plans in the opposition-dominated Senate then they would push the scheme through the joint sitting of the parliament where is enjoys majority.
Critics say the government is facing acute revenue shortfall and it might be pushing for the scheme to generate money to make up for this loss. The government officials say they are facing revenue shortfall of 126 billion rupees in the first half of the current fiscal year.
Observers say tax amnesty to the wealthy and rich is a big injustice to honest tax payers, particularly the hard-pressed salaried class who get their pays taxed at source.
Analysts say instead of giving any undue favors to those involved in tax evaders, the government should make them pay their taxes honestly and this money is judiciously used for the uplift of the poor people.
The writer is a senior journalist based in Islamabad
