YOU ARE HERE: LAT HomeCollectionsNews

In Pakistan, new tax chief plans to get evaders to pay up

A Pakistan official's plan to overhaul the tax system calls for an amnesty plus payment. Those who ignore his offer risk suspension of their ID cards.

December 13, 2012|By Alex Rodriguez, Los Angeles Times
  • Ali Arshad Hakeem, Pakistan's tax chief, says his main targets are the wealthy, including politicians and Cabinet ministers.
Ali Arshad Hakeem, Pakistan's tax chief, says his main targets are… (Naveed Akram, For The Times )


He stops at the name of a rich man from Peshawar.




If they ignore the offer, he says, the government will suspend their national identity cards, which are needed to travel abroad, maintain bank accounts and buy or sell property. That penalty probably would apply to people who continue to evade taxes after the amnesty ends, Hakeem's aides say. He will also disclose the names and assets of tax evaders in newspapers and on the Internet, he says, and he will push for legislation that rewards whistle-blowers who finger tax cheats.

It's a controversial approach, experts say, and one that critics say provides an easy way out both for individual and corporate tax cheats. Yet it is one that many believe is desperately needed in a country where less than 1% of the population pays income taxes. A host of ills hobble Pakistan, but at the top of the list is the country's inability to generate tax revenue. Pakistan's tax collection record is one of the world's worst. No one has been prosecuted for personal income tax evasion in 15 years, Hakeem said.

With revenue flow at a crawl, the government relies heavily on Western financial aid and bailouts from international lending institutions. Pakistan is due to repay $7.5 billion of what it owes to the International Monetary Fund by 2015, and so far has paid back less than a third of that amount. The government's overall debt earlier this year stood at about $130 billion, roughly 60% of its GDP.

Pakistan's reluctance to tackle tax reform hasn't gone unnoticed by Western leaders, who have warned Islamabad to address the issue or risk losing its lifeline. A Congressional Research Service report released in April cited Pakistan's 9% tax-to-GDP rate as one of the lowest in the world. "For most observers, this represents what essentially is mass tax evasion by the country's economic elite," the report says.







Los Angeles Times Articles