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Transparency and Public Shaming: Pakistan Tackles Tax Evasion

BY Jessica McKenzie | Thursday, April 17 2014

Screenshot of the tax directory. Those empty spaces mean no taxes were paid.

In Pakistan, where only one in 200 citizens files their income tax return, authorities published a directory of taxpayers' details for the first time. Officials explained the decision as an attempt to shame defaulters into paying up.

"This is an important milestone in providing access to information to the general public and should help in creating a sense of public awareness, motivation and transparency," Finance Minister Ishaq Dar wrote in the foreword of the Tax Directory.

"We hope this will become the talk of the town," the spokesman for the Federal Board of Revenue, Shahid Asad, said Wednesday. "People will be living these luxurious life styles and others will be saying to them – where is your name on that list?"

Reports from the Center for Investigative Reporting in Pakistan reveal that roughly half of Pakistani lawmakers failed to file taxes in 2012. That number was even higher in 2011, hovering around 70 percent.

This explains in part why reform has been slow going.

Some have complained that the directory contains information about tax payers, not evaders, and that it could endanger those at the top.

“They are punishing us for paying our taxes,” said SM Muneer, a wealthy tax payer.

However, when only one million people pay taxes, out of a population of 180 million, that is a much shorter list to publish.

To publish a list of tax defaulters, Shahid Asad said, “is practically impossible. We will have to give names of millions of people.”

Umar Cheema, an investigative journalist and co-founder of the Center for Investigative Reporting in Pakistan, writes that the tax directory is a well-intentioned initiative that was carried out all wrong:

[Finance Minister Ishaq] Dar has undoubtedly taken a courageous step by releasing the tax data that was until recently treated as classified record through wrong interpretations of the Income Tax Ordinance 2001. Now, as the tax record has been made public, the same law has been referred to support the decision of publishing the directory. . .

However, hiding the names of those who are persistent tax defaulters is a cruel joke with the tax return-filers. Filing return is mandatory in accordance with Section 115 (1) of the Income Tax Ordinance 2001. Failure in complying with this section has been termed as tax default. The non-filers can be asked to pay default charges under Article 205 of Income Tax Ordinance 2001. . .

But this all should have been started by putting them in the tax directory as the basic purpose of publicising [sic] the record is to let all and sundry know who is paying how much and who has refused to pay.

Instead of shaming those who failed to file tax returns altogether, the public is focused on those who filed but are still paying too little—like an expensive lawyer who declares no income.

This, Cheema writes, will encourage even more evasion in the future.

Pakistan is only the fourth country in the world to publish a tax directory, after Sweden, Finland and Norway.

Reducing tax evasion is one of the conditions of a hefty loan ($6.7 billion) from the International Monetary Fund.

The whole gazillion page directory is here...as a pdf.

My question for the Pakistani tax authorities is why they couldn't publish this information—all of it, including information about who did not file—in an easy-to-read format (not pdf!) so that data journalists could do interesting things with it. Publishing partial data in a hard-to-use format is half-hearted transparency at best.

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