Panama — a country with serene beaches, untouched rainforests, and the bank accounts of our country’s elites.—Creative commons
Here’s a question for Prime Minister Nawaz Sharif: How can you look the people of Pakistan in the eye and tell them to pay their fair share of taxes when your own sons and daughter are (reportedly) shifting money to the British Virgin Islands to minimise their tax bill as much as possible?
As the dust has settled from the revelations of the Panama Papers, it is becoming increasingly clear that the practices being used by members of the Sharif family were not unique — in fact, far from it.
Also read: 'We have done nothing wrong', PM Nawaz Sharif’s family reacts to leak
Instead, a picture is emerging of a morally repugnant and legally dubious practice being used on a wide scale by people who are at the very top of the political and economic ladder in Pakistan.
Maybe if the rich were not busy funnelling money to the Bahamas, our fuel tax could be less than 35 per cent, maybe we would lose less than 42 rupees per every 100 rupees of mobile credit, and maybe our rates of electricity would not be the highest in the region.
Former prime minister Benazir Bhutto, along with her nephew Hassan Ali Jaffery and Senator Rehman Malik, has been revealed as the sole shareholders of a petroleum company found by the UN to have bribed former Iraqi dictator Saddam Hussain having gained contracts in return.
Senator Osman Saifullah and his family have been reported as owning 34 companies in the British Virgin Islands and the Seychelles. Other Pakistani government officials too are on the list of owners of offshore companies in tax havens. And, when it comes to businessmen, the list is an even longer one.
Also read: Elite democracy
All these reports raise a lot of legal questions.
Having offshore companies in tax havens is not a crime, but why are Pakistan's elite political and economic players so eager to have bank accounts and companies in countries which have little to no taxes, strict bank secrecy laws, and are notoriously uncooperative when it comes to cooperating with Pakistani or even international authorities on the issue of money laundering and tax evasion?
If, for example, members of the Sharif family really wanted to buy six flats in London through a legitimate source of money and with the full intention of declaring those holdings on their tax forms, why didn’t they just buy them rather than purchasing them through companies set up in the British Virgin Islands?
Whatever the legality of the issue, one thing should not be in question. It is ethically bankrupt for the top one per cent of our country, who have the capacity to pay all their taxes without their lifestyle being unduly burdened, to still find creative ways to avoid doing so.
Also read: Offshore accounts — What they are and how they are used
Sixty-eight per cent of our tax revenue comes from indirect taxes which are regressive in nature, i.e. they have a disproportionate impact on the income of the poor.
Maybe if the rich were not busy funnelling money to the Bahamas, that percentage could be a little lower. Maybe our fuel tax could be less than 35 per cent, maybe we would lose less than 42 rupees per every 100 rupees of mobile credit, and maybe our rates of electricity would not be the highest in the region.
These numbers may not mean much to some of us, but they can make a world of a difference to those trying to survive in this country on a daily basis.
Also read: Pay up, Pakistanis — Tax-exempt patriotism won’t cut it anymore
And as for the politicians...aah the politicians. Their sheer hypocrisy is mind-boggling.
Our Prime Minister talks about the billions of rupees wasted through leakage in the tax net, while members in his own family perpetuate the problem.
Senator Osman Saifullah sits on the Tax Reform Commission “set up by the government to check revenue leakage, broaden the revenue base and improve tax administration”, while his family owns 34 companies offshore — you really can’t make this stuff up.
And Senator Rehman Malik who claims this entire story is a plan concocted by RAW? Well, the less said about him the better.
Also read: What the Panama Papers disclose about Pakistan’s politicians
Year after year, our lawmakers — a third of who do not even pay taxes — have voted to further increase indirect taxation in Pakistan whilst they, along with our country’s elites, are simultaneously involved in the large scale transfer of taxable assets outside the country.
Together they all benefit from this kleptocratic system of government where the rich and the powerful do as they please.
And, as always, at the end of the day it is the poor who bear the burden.