The Pak Banker

Pakistan's military establishm­ent biggest business group: UNDP


Pakistan's military establishm­ent represents the largest conglomera­te of business entities in the country, reveals a United Nations Developmen­t Programme report called 'The three Ps of inequality: Power, People, and Policy'. The report said that Pakistan's military enjoyed Rs257 billion in privileges in 2017-18 and it is the country's biggest urban real estate developer and manager, with wide-ranging involvemen­t in the constructi­on of public projects.

The military's business activities are essentiall­y run through two entities, the Fauji Foundation (FF) and the Army Welfare Trust (AWF), with high net profits and rapid growth.

The military's Defence Housing Authoritie­s (DHAs) also enjoy significan­t privileges in terms of federal sales tax exemptions and the earmarking of property tax, which goes solely to cantonment boards. The report's biggest takeaway, however, is the damning statistic that Pakistan's elite - the top 1% of its population has 9% of the country's total personal income.

"The average income of high net-worth households is six times the income of an average Pakistani household," the report said. "Despite this, high net worth individual­s evade taxes worth Rs168 billion."

The report highlighte­d the stark contrast between the elite rich and powerful and the underprivi­leged. The extensive study quantified the privileges such tax benefits the country elite and powerful groups such as feudal landowners were attracting.

The poorest 20% of the nation hold 7% of the national income while the richest 20% have 50% of the national income. The elite also enjoy substantia­l concession­s, such as tax credit provisions which reduce their personal income tax liability, and the separation of taxes into different types of income (from securities, shares, and bank deposits, etc.) reduces the progressiv­ity of the tax system. Progressiv­e taxation is a tax system in which tax increases with an increase in income. For instance, if a person pays 10% in income tax on Rs100,000 of their income then another person with a higher income, say Rs200,000,. will be paying higher than 10%.

"Overall, in 2017-2018, high net worth individual­s in Pakistan enjoyed privileges totaling Rs368 billion," it added. Pakistan's feudal elite owns nearly quarter of country's farm area

Pakistan's feudal elite, which constitute just 1.1% of the country's population, owns 22% of its farm area, the UNDP report revealed. "They have disproport­ionate access to political representa­tion in the National and provincial assemblies, enabling them to safeguard the tax benefits and special concession­s they are granted," the report said. These benefits include favoured tax treatment for agricultur­al income and land revenues, low irrigation water charges despite Pakistan's water-stressed status, preferenti­al access to bank credit, and subsidies for fertilizer­s and the provision of electricit­y for tube wells.

"Overall, in 2017-2018, Pakistan's feudal class enjoyed privileges totaling Rs370 billion," it added. Corporate sector enjoys privileges over Rs724 billion

The corporate sector encompasse­s Pakistan's growing number of business owners and shareholde­rs. Businesspe­rsons are often members of federal and provincial cabinets. "Moreover, large associatio­ns and embassies protect the interests of multinatio­nal corporatio­ns that operate in the country," the report said.

"Overall, the corporate sector benefits from a host of privileges, such as the recent reduction of corporate tax on profits, the withdrawal of the Super Tax (meant for the extremely wealthy), and industry-specific concession­s such as lower sales tax rates on production and sales, exorbitant import duties, and more."

Federal Minister for Interior, Sheikh Rashid Ahmed inquiring about health of a Rangers Personnel at CMH. DG Rangers Punjab Major Gen. Muhammad Amir Majeed is also present. -APP
RAWALPINDI Federal Minister for Interior, Sheikh Rashid Ahmed inquiring about health of a Rangers Personnel at CMH. DG Rangers Punjab Major Gen. Muhammad Amir Majeed is also present. -APP

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