Under the law in Pakistan, political parties and politicians are required to file annual accounts and declarations of assets and liabilities. Rule 4 of the Political Parties Rules, 2002 says that "every political party shall maintain its accounts in the manner set-out in Form-I indicating its income and expenditure, sources of funds, assets and liabilities and shall, within sixty days from the close of each financial year (July-June), submit to ECP a consolidated statement of accounts of the party audited by a Chartered Accountant, accompanied by a certificate, duly signed by the Party Leader to the effect that no funds from any source prohibited under the Order were received by the party and that the statement contains an accurate financial position of the party." Our political parties seldom prepare accounts reflecting their actual affairs. They openly defy Rule 4 of the Political Parties Rules, 2002. The purpose of this Rule is to enable voters, political workers, media and civil society to know about transparency in financial matters of political parties, but ECP is least bothered to enforce it.
Section 42A of the Representation of People Act, 1976 and section 25A of the Senate (Election) Act, 1975 make it mandatory for the elected representatives to file in the prescribed manner details of their assets and liabilities on the closing date of each financial year, failure to fulfil this obligation leads to disqualification. Compliance level of our representatives is extremely unsatisfactory-detail available at the website of ECP. Every year, ECP suspends a substantial number of lawmakers for not complying with this statutory obligation in time. There is no mechanism to verify the statements of assets and liabilities submitted to ECP as FBR does not verify data or take any action for understatement of incomes and assets by legislators. National Accountability Bureau [NAB] has also never bothered to check the veracity of declarations by legislators vis-à-vis standard of living maintained by them. In their tax returns, majority of them show emoluments received as members of Parliament the only source of income to enjoy palatial residences, expensive cars, foreign tours and army of servants!
It is a matter of record that political parties in Pakistan do not file tax returns and FBR has never bothered to issue them notices. In India, there is a mandatory provision of law [section 13A of Income Tax Act, 1961] requiring political parties to file returns. The Chief Election Commissioner of India requests the Indian Central Board of Direct Taxes (CBDT) to scrutinise accounts submitted by political parties. In the same manner, the Central Information Commission of India directs Income Tax Department to disclose in public interest, details of donors mentioned by political parties in their tax returns. With this information in public domain, the Commission says there would be transparency in the funding of both small and big parties, besides checking the flow of black money in the electoral process. In Pakistan, neither ECP nor NAB/FBR has bothered to consider this vital matter. In Pakistan, on the contrary, the Protection of Economic Reforms Act, 1992 gives a free hand to tax cheats and money launderers to get billions whitened, which has never been examined by anybody from this perspective. All public office holders who have taken advantage of this law to avoid tax should have been disqualified for open admission of cheating the State but not a single case has been filed till today and ECP, FBR and NAB have never taken cognisance of it. They have never examined the assets held by elected members in the names of their dependants or benami [in fictitious names].
Another glaring example of defying laws by elected members is non-compliance of Section 116 of Income Tax Ordinance, 2001 requiring filing of wealth statements and declaration of personal expenses in the prescribed manner for all individuals having income of one million or more. It means that all persons holding public offices having this threshold of income should have filed wealth statements conforming to their declaration of assets and liabilities filed under the election laws. In the Tax Directory for tax year 2013, FBR revealed that majority of elected representatives did not comply with section 116 of the Income Tax Ordinance, 2001 in time. Instead of taking action against them for infraction of law, they were "requested" by FBR to file returns belatedly and no fine was imposed though law so required. It was later learnt that even 1020 officers of FBR did not file tax returns in time! Obviously, they lost moral ground to take action against any defaulter!
It is high time to make filing of tax returns mandatory for all registered political parties, which should be scrutinised and made public with any citizen having the right to question their veracity. Donations received by parties should qualify for tax credits, Political parties are treated as non-profit organisations all over the world, working for public good. In Pakistan we have not yet promoted the idea that political parties should be exemplary non-profit organisations fully committed to further the cause of public consciousness and welfare on all matters related to governance. This idea is important from many angles. Once people associate themselves with a particular party having clear objectives and aims, they also extend financial support for their achievement, thus eliminating the influence of undesirable "financiers"-people with money power taking control of parties for personal gains. Meaningful participation of masses in democracy and electoral process can only be ensured if they have the right to question their leaders about use of their money. This would also make the party a responsible and accountable entity when in power.
Politicians need to act responsibly in all spheres-whether in power or in opposition. Their role is pivotal for effective working of institutions of the State. Being role models, it is imperative for them to show others by their conduct, the supremacy of rule of law. If they indulge in corruption and malpractices, the entire political system becomes discredited. Admittedly and rightly their main focus has always been on capturing power. There is nothing wrong about it. But once in power, favouring the near and dear and/or amassing wealth and power through unlawful means is what destroys democracy. While in power, they should demonstrate by their actions that they are custodians of public faith and are bound to work for public cause and not personal gains. Why have they failed to do so in Pakistan? The main causes are authoritarians within the parties, no respect for merit and lack of accountability. Presently, almost all political parties in Pakistan are controlled either by a single person or a handful of individuals with workers showing loyalty to their "chief" rather than to the party's manifesto/programme. Obviously, in return, they expect personal favours from the "chief" when the party assumes power.
There is formidable resistance from politicians against establishment of an independent accountability authority in Pakistan as they know that such a body would expose their corruption and end their control over the State. The way forward is that political parties should be forced to keep proper accounts, get them audited by reputed firms and file income tax returns. Once this is made mandatory under the law, they would have no option but to take into their folds only those people who honestly discharge their tax obligations. The process of filtration within the parties is a necessary step towards a transparent and democratic set-up.
If Pakistan has to emerge from the prevailing political mess, democratisation of political parties is a must. Political life of an individual requires that he complies with all laws of the land-one demonstrative proof of it is to discharge fiscal obligations. If a politician does not pay his taxes honestly then how can he expect the man on the street to do the same? Lack of tax culture in Pakistan has its roots in the open defiance of tax laws by the rich and mighty. Not only have they kept themselves outside the tax ambit, they also take pride in telling others that tax officials dare not question them. For them this vulgar show of power is necessary to emphasise why they are superior to the meek common folk and thus have unchallengeable right to rule. With this mindset, the rulers in Pakistan have turned the country into their personal fiefdom, and they want it should be inherited by their offspring.
(The writers, partners of law firm, Huzaima & Ikram, are Adjunct Faculty at Lahore University of Management Sciences. The views expressed in this article are not necessarily those of the newspaper)