Recap - Nawaz Sharif

SOURCE: Jang-Group October 17, 1999, Karachi / DAWN April 25, 1999, Karachi

The deposed prime minister Nawaz Sharif and his brother Shahbaz Sharif, does not pay any tax. Despite having declared assets of Rs 676.8 million of the Sharif family, both the brothers filed a zero income tax and deficit wealth tax returns, last year.

Out of every 100 persons of this poor country of 140 million people, only one Pakistani is a taxpayer, and the tax to GDP ratio is not more than 10 per cent, against an average of 18 per cent for the third world countries.

Tax evasion is rampant and, generally, everyone who is some one in this country does not like to pay his or her tax. Agriculture sector is the best example. With its 25 per cent share in the gross domestic product of over Rs 3,000 billion, its share in income tax is mere few hundred million rupee. More than 90 per cent members of the electoral Houses, both at the federal and the provincial level, has a feudal and landlord background. So, they use all their powers to stay out of the tax net.

The industrialists used this provision by holding large agricultural farms to hide their taxable incomes. Traders or retailers, known as shutter power, have also been successful by shutting their business down whenever an attempt was made to tax their incomes.

So, it leaves the burden of tax only on the urban salaried class. This constrained revenue outlook forced the policy-makers in initial years of the 90s to introduce deductions at source on various income streams, including interest incomes, rental income, income of exporters, importers, suppliers, contractors, etc, in shape of withholding and presumptive taxes.

Fixed levies were also introduced either on ownership and trading in assets, like property and automobiles, or on consumption of services, like electricity and telephone. After failure of these attempts, another indirect mechanism of surcharges emerged, largely on petroleum products, and more recently on edible oils. Rather than transferring the benefits of falling prices to consumers, the government found it expedient to pick up the difference as a windfall in revenues.

The tax strategy for the fiscal 1998-99, remained weak and non-innovative that forced the multilateral donors to put their foot down by pressing the government to go for the value-added mode of sales tax. Removal of sectoral exemptions from GST, like services, electricity, gas and POL products has to be announced, and the retailers and fixed taxpayers were brought under a turnover tax regime to nab the potential tax evaders.

These measures were generally, revenue-neutral. Some of these measures were, however, revenue-oriented, like increase in gas and furnace oil prices, GST on packed/ branded food items, and introduction of turnover tax on retailers and fixed taxpayers.

During the caretaker regime of Moeen Qureshi, tax records of various leading politicians were leaked to the press. These records showed that majority of the politicians either filed zero income tax statements, or made partly contributions against their huge declared and undeclared assets. Benazir Bhutto, Farooq Leghari and others were also mentioned in such news reports.

The 11-member family of Mian Muhammad Nawaz Sharif holds a gross wealth of Rs 676.8 million (declared in tax returns). However, Nawaz and Shahbaz paid no income tax or wealth tax to the national exchequer.

Following the modern tradition of large industrial houses, the family of Nawaz Sharif also owns large agricultural farms. Nawaz Sharif himself owns two pieces of land at the Raiwind Road and Mandiali (Sheikhupura), containing 212 Produce Index Units (PIUs).

According to the tax statements of June 30, 1998, total income tax paid by the 11-member Sharif family was just Rs 0.25 million. The family also paid Rs 0.55 million as wealth tax and 0.13 million as agriculture tax raising the total tax payment of the family to Rs 0.94 million. This amount is just a peanut, keeping in view their business empire that actually runs into many billions.

The tax statements declared majority of the industrial concerns in losses and the income tax was computed largely on the salary paid to the directors of the group or on the dividend paid by Chaudhry Sugar Mills. The total income tax, wealth tax and agriculture tax paid by the family, with a gross worth of Rs 676.8 million, was just Rs 0.94 million or a little above 0.1 per cent of the total declared asset value of the family.

The 11-member family includes Mian Muhammad Sharif, Mrs Shamim Akhtar, Mian Muhammad Nawaz Sharif, Mrs Kulsoom Nawaz Sharif, Hussain Nawaz, Hassan Nawaz, Mian Shahbaz Sharif, Mrs Nusrat Shahbaz, Hamza Shahbaz, Mian Abbas Sharif and Mrs Sabiha Abbas. Majority of the assets were in the name of elders, minors and wives of the Sharifs.

The factories declared by the Sharif family show losses. These industrial units, as shown in the various tax returns include Chaudhry Sugar Mills, Ramzan Sugar Mills Ltd, Mehran Ramzan Textile Mills Ltd, Muhammad Baksh Textile Mills, Hamza Spinning Mills, Hudabiya Paper Mills, Hudabiya Engg (Pvt) Ltd, Hamza Board Mills, Kulsoom Textile Mills, Ittefaq Brothers (Pvt) Ltd, Ilyas Enterprises (Pvt) Ltd, Brothers Steel Ltd, Ittefaq Sugar Mills, Khalid Siraj Textile Industries, Ramzan Baksh Textile Mills, Ittefaq Textile Mills, Brothers Textile Mills, Ittefaq Foundries, Khalid Siraj Industries, Barkat Textile Mills, Abdul Aziz Textile Mills, Brothers Sugar Mills and Effective (Pvt) Ltd.

According to the documentary evidence, the deposed prime minister, Muhammad Nawaz Sharif with national tax number (NTN) has declared his income tax liability as 'nil' on June 30, 1998. His total net wealth (as declared) was Rs 2.1 million and total admissible debts were shown at Rs 6.4 million. So his net wealth, according to the tax statement (assets minus admissible debts), would go into deficit.

The income tax liability of Mrs Kulsoom Nawaz was also shown as 'nil'. However, she declared a small amount of eight thousand rupee as tax on dividend from Chaudhry Sugar Mills where she had declared to hold 4,000 shares. The net asset value of Mrs Nawaz was shown at Rs 3.98 million. However, her net wealth was computed at Rs 32 thousand after adjusting admissible loans of Rs 3.95 million. So, she paid Rs 178 only as wealth tax for the year ending June 30, 1998.

The tax return of Mian Shahbaz Sharif shows one thousand rupee tax deducted on dividend received by him from Chaudhry Sugar Mills. He had declared to have 5,000 shares of the unit. Mian Shahbaz also filed a deficit tax return of Rs 4.5 million.

The Big Sharif-Mian Muhammad Sharif declared to have shares of Chaudhry Sugar Mills. Mian Sharif had paid Rs 50102 as his income liability. Father of the prime minister paid Rs 1.96 lac as wealth tax. He also owns 2834 PIUs agricultural land at Feroze Watoan Sheikhupura and Lahore. Mother of the prime minister also paid Rs 60 thousand income tax. She announced to have 18174 PIUs agricultural land in the rural area of Lahore. She paid Rs 131 thousand as agriculture income tax.

Beyond this there are many references against him under his 1997 Ehtesab Act, these include:

1. Income tax evasion
2. Wealth tax evasion
3. Concealment of facts to evade property tax
4. Opening false accounts
5. Whitening of black money by amending laws
6. Whitening of money through FEBCs
7. Illegal appointments in PIA
8. Abbotabad land scam
9. Import of BMW cars in violation of laws
10. Taking loans without fulfilling the legal requirements
11. Concealment of property in the US
12. Illegal appointments in the FIA
13. US wheat purchase scam
14. Murree land scam
15. Irregular promotions in the FIA
16. Forcing passports and money laundering
17. Concealment of helicopter when filing assets
18. Favourable treatment to Kohinoor Energy Ltd causing a Rs.45 crore loss
19. Unlawful cash finance facility given to Brothers Sugar Mills
20. Bribe offered to ANP Senator Qazi Mohammed Anwer
21. Illegally appointing the chairman, CBR
22. Causing a Rs.35 billion loss by writing off/rescheduling loans
23. Relaxing import duty and amending laws to import luxury cars
24. Utilizing funds from the national exchequer to bribe Maulana Sattar Niazi
25. Plundering Rs.200 million from Jahez and Baitul Mal funds
26. Making 130 political appointments in federal departments
27. Relaxing export duty and rebate to transport sugar to India
28. Withdrawal of case against Senator Islamuddin Shaikh

With all this and including the $500,000 ‘election contributions’ from bin Laden, one has to ask how Sharif is Nawaz Sharif?