10 Facts About Corruption in Pakistan
Pakistan, a nation of 197 million, has long been an ally of the U.S. and has come a long way in combatting corruption and graft within its government infrastructure. Nevertheless, the 21st century has seen corruption grip the country. Pakistan rates 33/100 on Transparency International’s Corruption Index (lower numbers = more corrupt and vice versa) and ranks 133/180 in terms of corruption. GAN states that corruption is a significant obstacle to all forms of business in Pakistan, regardless of whether the actor is a large multinational, an international NGO or a Pakistani corporation. Despite efforts by the national government and provincial legislatures to reduce corruption, it still presents a severe stumbling block to national growth. NGOs, despite the massive hurdles that corruption creates, have filled in the gap and begun working across the country to fight it. Anti-Corruption Force Organization Pakistan (ACFOP) is one such organization with chapters active in every province of Pakistan providing representation for the marginalized and a voice for those who have suffered monetarily and physically as a result of corruption in the system. With that, here are 10 facts about corruption in Pakistan.

10 Facts About Corruption in Pakistan

  1. Corrupt Prime Minister Nawaz Sharif: The leak of the Panama Papers in 2016 revealed that Prime Minister Nawaz Sharif and his children owned four offshore companies through which they laundered money and facilitated bribes. Sharif received 10 years in jail by Pakistan’s anti-graft court, while his daughter Maryam received a seven-year sentence.  Sharif also garnered a lifelong ban from politics, effectively ending his hopes of a political dynasty.
  2. Corruption in the Army: Pakistan’s Armed Forces has a long history of corruption. According to Shamil Sams, writing for DW, the Pakistani government manages its own budget and can increase it without civilian oversight. Army officials have engaged in illegal activities such as cross-border smuggling, illegal toll collection at military checkpoints, illegally levying funds from private businesses and extorting landowners in the Okara region.
  3. Corruption in Law Enforcement: The presence of police corruption in Pakistan is a daily reality for a shocking number of Pakistani citizens. According to the Michelsen Institute, almost 100 percent of correspondents to a Transparency International survey reported daily solicitation of bribes by police officials. Policemen in multiple provinces have received accusations of performing extra-legal killings and torturing detainees. There is even a phrase for the culture of corruption in the law enforcement field; Thana Culture, an Urdu-derived word for police station. Human Rights Watch indicates that there is a critical lack of political will to reform law enforcement in Pakistan and that there is a framework of legal protections that shield law enforcement officials from accountability.
  4. Corruption in the Judiciary: Bribery is incredibly commonplace in Pakistani courtrooms. The Michelsen Institute found that 96 percent of all correspondents who came into contact with the judiciary encountered corruption in 2006 and that 44 percent had to pay a bribe directly to a court official. The procedure to select judges on a national level is highly susceptible to political favors, and the judges themselves receive an exemption from an audit by the National Accountability Bureau. The PTI party (Pakistan Tehreek-e-Insaf/Pakistan Movement for Justice) has made judicial reform one of its targets now that it is the head of the ruling coalition. It is currently considering numerous reforms to the judiciary to combat rampant corruption.
  5. Corruption in Rail Transit: According to Pakistan Today, corruption and mismanagement in public transportation are exceedingly common. In a 2010-2011 audit, the Pakistani government concluded that the lion’s share of Pakistan Railways’ financial deficit was the result of embezzlement and wastage of funds. Following the audits, there were numerous investigations to provincial and national level transit administrations. Another high-profile surplus scandal in 2014 prompted another wave of investigations, with the NAB (National Accountability Bureau) spearheading the effort.
  6. Corruption in Public Utilities: Transparency International found that almost 64 percent of citizens surveyed established power in their home through alternative methods, all of which fall under the purview of corruption. These methods include payments to office staff and having to make repeated payments in order to get services. Ninety-five percent of these correspondents also reported additional corruption when it came time to pay the bills. ACFOP has been active in this field, advocating for the poor in provinces like Punjab and Balochistan and offering legal counsel in their struggles against utility companies as a part of their mission.
  7.  Corruption in Health Care: According to research from the University of Karachi, petty corruption in health care is an increasingly dire problem in Pakistan. Its research uncovered the widespread presence of corruption in hospitals servicing low-income communities. It also found that out of 342 people surveyed, one-third encountered corruption in the form of paying bribes during admissions. People paid these bribes to doctors, hospital staff and even nurses. ACFOP has taken to social media and the public sector to raise awareness of corruption in health care on the provincial and national levels.
  8. Corruption in Taxation: Transparency International reports that corruption is prevalent among bureaucrats that involve themselves in tax collection. Its research found that tax inspectors and officials accounted for 14 percent of bribes that the average consumer paid out in a year. NGOs like the ACFOP and Transparency International Pakistan are working across all provinces of Pakistan to fight corruption in tax collection by identifying cases of corruption and lobbying local governments.
  9. Cricket Corruption: Corruption is so prevalent in Pakistan that it has leached into its sports teams. In 2011, members of Pakistan’s national cricket team received a conviction of receiving bribes from a bookmaker and agreeing to underperform at the team’s match against the British cricket team during the Lord’s test match. The International Cricket Council banned the players along with bookmaker Mazhar Majeed, and the players received prison sentences.
  10. National Accountability Bureau: Others have even accused the National Accountability Bureau, which is an organization that emerged in 1999 to fight corruption. In 2015, the Supreme Court of Pakistan accused the NAB of mismanagement. According to DAWN, two mishandled cases, one involving finance officers stealing from bomb victims and another dealing with land misappropriation, drew the ire of the Supreme Court, which claimed that “This represents serious maladministration and want of proper procedures and supervision within NAB.”

Hopefully, these 10 facts about corruption in Pakistan illuminate a critical but often overlooked shortcoming of one of the U.S.’s closest allies in the Middle East. It is important for a wider audience to see these facts so that NGOs around the world can do their part to help the people of Pakistan.

– Benjamin Mair-Pratt
Photo: Flickr

erasing tax havens
Currently, about 50 percent of countries have poverty rates that are lower than 3 percent. Despite the declining rate of global poverty, poverty rates in poor countries remain high. The existing global system allows for both wealthy companies and individuals to benefit within the global economy through tax avoidance with the use of tax havens, but erasing tax havens and having corporations pay more legitimate and realistic taxes could eliminate global poverty and inequality.

What are Tax Havens?

Tax havens are countries or territories where corporate houses register and operate. According to tax laws, these corporate houses do not have to pay taxes on the profits they make in the area where they operate. The corporate houses do not pay taxes based on the overall group economic performance of the companies but rather based on individual entity. The multinational companies also have an element of secrecy in that tax havens share limited to no information regarding finances with foreign tax authorities.

Effects of Tax Havens

The use of tax havens is not just unique to multinational companies; some wealthy individuals utilize the system as well. The mass amounts of unpaid taxes are denying the world’s poorest governments billions of dollars. In February 2015, a few rich individuals with ties to Kenya were storing more than $560 million in bank accounts in Switzerland. The hidden wealth in tax havens could salvage the lives of four million children and 200,000 mothers in African countries. The gap between the wealthy and the poor in the world grows wider every year, and tax havens primarily fuel it. This is considering that $7.6 trillion of personal wealth hides in offshore accounts that tax havens run. This negatively impacts the fight to eliminate global poverty.

In the 1990s, 5 to 10 percent of global profits from multinational companies shifted, meaning that the jurisdictions where the economic activity took place proclaimed the profits for tax purposes. By the early 2010s, 25 to 30 percent of multinational companies’ global profits shifted. According to the International Monetary Fund, the active practice of corporate tax avoidance around the world has put the global revenue losses between $200 billion and $600 billion and lower-income countries make up around $200 billion of the global revenue loss. There are approximately 650 million poor people globally who live beneath the international poverty line of $1.90 per day. If a new country emerged with a Gross Domestic Product of the $200 billion revenue from low-income countries due to tax havens, the country could eliminate global poverty just by giving $2 every day to those 650 million people.

The Unitary Tax Approach

One way multinational companies are trying to curb tax avoidance is through the apportionment reform programs or the unitary tax approach. Through the unitary tax approach, global governments would assess tax havens’ profits as a group rather than as individual entities. This method would apportion the profits that the tax havens make as a group to each of the countries where the companies operate based on how much economic activity took place in the respective countries.

In using the unitary tax approach, multinational companies would receive taxes where employees do the actual work rather than where the ledgers hide. Due to the fact that the economic activity that the tax havens are carrying out in countries would be more authentic, a greater deal of the global shares of the corporation’s profits would distribute to the countries, and then each country would have more reign to exercise their taxing rights and tax its shares of global profits at a more reasonable rate. A global shift to the unitary tax shift approach overall would benefit not just the U.S., but also low-income countries in the fight to eliminate global poverty.

Erasing tax havens is necessary as they are detrimental to the global system in that they rob governments of the opportunity to eliminate global poverty and socioeconomic inequality by depriving governments of needed public service resources such as health and education. Erasing tax havens is vital to eliminating global poverty, and global tax laws need to modify to benefit many, not just a few.

– Cydni Payton
Photo: Flickr

Soda Tax in Mexico

Type 2 diabetes recently became one of the leading causes of death in Mexico. The number of diabetes-related deaths will continue to rise. Furthermore, scientists have predicted that at least half of Mexico’s population will have diabetes by 2050. Conditions such as being overweight and obesity have strong links to the development of Type 2 diabetes. In response to the growing health concerns associated with obesity and diabetes, the soda tax in Mexico has been implemented to reduce liquid sugar consumption and promote healthier lifestyle choices.

Tax on Soda

Mexico has historically been a top consumer of sugar-sweetened beverages. In 2012, the average person consumed 176 liters per year. Mexico made the world’s top consumer of soda per capita.

The popularity of sugary drinks has come with negative consequences. As soda consumption rose, the number of people suffering from obesity and diabetes in Mexico also increased. While sugar-sweetened beverages were not the only drivers of the weight-related problems plaguing the country, they did receive the most attention from health officials.

In 2014, Mexico began taxing all sugar-sweetened drinks. The tax roughly increased the price of the sugary drinks by one peso per liter. The purpose behind the soda tax was twofold:

  1. Reduce the consumption of liquid sugar that contributed to high obesity and diabetes rates.
  2. Increase funding for public health-based programs to promote healthy lifestyle choices.

Mexico’s Struggle with Diabetes

The soda tax in Mexico was an important step in the country’s fight against diabetes. In 2018, a report found that nearly one-third of the Mexican population was living with diabetes. The most common form diagnosed was Type 2 diabetes, which causes blood glucose (sugar) levels to be higher than normal. The exact cause remains unclear, but obesity was strongly linked to the development of Type 2 diabetes.

Link Between Obesity and Diabetes

The World Health Organization (WHO) reported that a healthy diet includes the consumption of about 2,000 calories per day. The average Mexican adult consumes over 3,000 calories per day. Mexico has one of the highest obesity rates in the world. The number of Mexican adults suffering from obesity rose from 20.5 million in 2012 to 24.3 million in 2016.

Food insecurity and undernourishment were the leading causes of obesity, especially among the poor. The United Nations Food and Agriculture Organization (FAO) found that unreliable access to food contributed to multiple health conditions. In addition, much of the food produced in Mexico was high in carbs and fats. Mexican farmers favored crops that were cheap and easy to grow (like corn) instead of focusing on their nutritional value. Consequently, the average Mexican diet has higher carbs and fats than recommended.

The poor have been the most vulnerable to obesity. A study found that poor communities had obesity rates 145 percent greater than wealthy communities. The stress of food insecurity and undernourishment impair the poor from making the best food choices for their health.“When household resources for food become scarce, people choose less expensive foods that are often high in calories and low in nutrients,” explained the FAO.

Did the Soda Tax Work?

Diabetes has no cure. While medication is a big part of treatment, most doctors recommend a lifestyle change for diabetics looking to keep their blood glucose levels under control. The “Soda Tax” sought to help with the lifestyle change by saving people who avoided sugary drinks money.

Since 2014, the sales of sugar-sweetened beverages have dropped throughout Mexico. Sales dropped by 5.5 percent the first year. By the second year, sales were down by 9.7 percent. The sales of untaxed beverages increased by about 2 percent. However, the calorie intake of the average person has remained unchanged.

– Paola Nuñez
Photo: Flickr

Living Conditions in MonacoMonaco, a small sovereign principality on the French Mediterranean coastline, is famous for its exceptional beauty, mild climate, and wealth. France surrounds Monaco on three sides and the Mediterranean Sea surrounds the other. Monaco is just 10 miles from the northern border of Italy. Monte Carlo, the state’s main district, is a popular luxury tourist destination and home to high-profile cultural staples like the Formula One Monaco Grand Prix, the Hotel de Paris and the Casino de Monte-Carlo. The principality is the second smallest independent state in the world after the Vatican and roughly the size of New York City’s Central Park. Home to about 39,000 people, Monaco is one of the richest nations in the world.

 Top 10 Facts About Living Conditions in Monaco

  1. The principality is governed by a hereditary constitutional monarchy with Albert II of the Grimaldi family, the current Prince of Monaco, at the helm. The Grimaldi family has been in power since they took over the region in 1297 and exercised absolute control until the nation’s first constitution was drafted in 1911. They celebrated 700 years of rule in 1997. Monaco’s second constitution, drafted in 1962, outlines the power of the executive, legislative and judicial branches and reinforces a shift of power from the family onto the state.
  2. Monaco does not levy personal income, capital gains, property or wealth taxes on its residents. Its business taxation policies are relatively lenient. This has turned the city-state into a tax haven for the wealthy, incentivizing the world’s richest people to buy property and establish businesses in Monaco.
  3. Because Monaco’s tax policies attract the world’s richest, the per capita income in Monaco is among the highest in the world, estimated at about $161,000 per year. Monaco has the highest concentration of millionaires and billionaires in the world.
  4. Real estate in Monaco is the most expensive in the world. In 2016, property sold for an average of $45,360 per square meter. These prices are significantly greater than in Hong Kong ($42,840) and Tokyo ($39,100), both famous for their expensive real estate.
  5. Less than a quarter of Monaco’s 38,000 residents are citizens. The vast majority of people in Monaco are wealthy foreigners. Many Monaco natives are not wealthy and must rely on government subsidies in order to afford to remain in Monaco. It is nearly impossible for foreigners to become citizens, so government subsidies are tailor-made to support Monaco natives.
  6. The unemployment rate is estimated at 2 percent, one of the lowest in the world. The Prince of Monaco guarantees every resident of Monaco a job, and the most popular industries among residents are tourism, finance and insurance. The region is also a hot-spot for research, with many residents working in the research industry.
  7. Education is mandatory for every child in Monaco and is provided for free by the Department of Education. Monaco’s literacy rate stays consistent at 99 percent. About 70 percent of Monaco’s students attend a public institution, while the rest attend one of several private schools in the region.
  8. Every worker in Monaco pays into the public healthcare system, and as a result, every contributor is reimbursed for the majority of their medical costs. Plus, with about 581 doctors per 100,000 people, Monaco has one of the highest concentrations of doctors in the world. Abundant sources of funding and doctors make healthcare in Monaco excellent, reflected in Monaco’s average life expectancy of 89.5 years.
  9. Crime in Monaco is very rare, and Monaco’s police force, consisting of 515 people, makes it the largest police force per-capita and per-area in the world. Monaco is one of the safest places in Europe and earned the nickname of “the safest square mile in Europe.”
  10. Monaco has the lowest poverty rate in the world. By attracting the world’s richest people, the state effectively eradicated poverty.

Monaco’s paradisal and business-friendly reputation attracts money from all over the world, causing its economy and residents to prosper. As a result, the living conditions in Monaco are unparalleled, and poverty is nonexistent in the state. A mix of political stability, low unemployment, low crime, high-quality health care and government assistance programs maintain Monaco’s high standard of living. As long as these aspects of Monaco endure, the phenomenal living conditions in Monaco should persist.

Jillian Baxter
Photo: Flickr

Poverty in Karachi
Karachi is Pakistan’s largest city and is the capital of the Sindh province located in southern Pakistan. Karachi is home to a major seaport on the shores of the Arabian Sea as well as massive commercial and industrial infrastructure. Increased development of air travel, in addition to the foreign traffic maintained by the commercial and financial industries, has made this city important to the overall economy in Pakistan. Regardless of these achievements, the city still faces poverty, which these facts about poverty in Karachi will illuminate.

Facts About Poverty in Karachi

  1. District governments within the city of Karachi do not have the power to increase taxes, which could be used to rectify local issues there. The Provincial Administration maintains the power instead of the taxpayers or the constituent electorate, which creates a democratic deficit within the metropolis.
  2. In regards to such a deficit, there is a notable underperformance in urban development. Foreign business is the largest part of the industry and economy in Karachi. Because of this, the Provincial Administration puts an emphasis on financial districts and expensive urban building for such purposes.
  3. A majority of tax revenue goes towards the seaports, airports, franchise business, stock brokers and telecommunication systems. The emphasis on finance and business distracts from the local problems. Most of the citizens live with social injustices daily, but their tax money is not being used to solve these problems.
  4. In Karachi, residents suffer from congested roads and poorly planned yet expensive public transportation systems. There is effectively no low-cost housing in the city, which has led to the rise of slums. There is also a shortage of water, leaving many without access to water at all, or at least water that is safe to drink.
  5. Many farmers located in the rural parts of the metropolis are deprived of water from irrigation systems. A large percentage of farmers have turned to using water that is mixed with sewage lines in an effort to grow crops. However, the produce that is harvested is often polluted and unsafe for human consumption, an unfortunate truth in the facts about poverty in Karachi.
  6. Policies geared towards the rapid industrialization of Pakistan had aimed to bring the country to its “take-off” stage. These policies, in retrospect, have actually made the rural lower class even poorer. More than ₨. 1 trillion (about $14.6 billion) was spent on infrastructure with the intention of lowering the local poverty rates in Karachi. Due to poor governance and irresponsible planning, much of this money was wasted and inflicted more economic harm on the lower-class citizens.
  7. There is a lack of access to social services and resources in poor households. Fifty percent of the rural population has been left without land, while approximately 75 percent of urban dwellers work in the informal economy.
  8. There are now more than 600 slum areas in Karachi. These slums are notable for hosting criminal activity as well as hiding criminals. In 2014, following the aerial firing on the Karachi airport, the suspects were found hiding in a local slum. Slums like Afghan Basti, Manghopir, Pehlwan Basti and Sohrab Goth are some of the better-known slums hosting criminal activity within Karachi.
  9. According to Inspector General Mushtaq Mehar, approximately 65 percent of the Karachi population lives in a slum. Residents of the slums are typically issued official identity papers, yet it remains difficult to verify and monitor them as many give false information. This makes it challenging to track down the criminals who may be hiding there.
  10. Despite these circumstances, there are many locals who are fighting back against poverty. UNDP’s Youth Employment Project provides employment opportunities as well as job training in the textile/garment industry. Around 30 percent of Karachi’s population is made up of youths aged 15-29. There are more than 5,000 students enrolled in this program. Initiatives such as this help those who cannot afford schooling to receive a valuable education and eventually earn a dependable source of income.

In his paper “Genesis of Urban Poverty”, Tasneem Siddiqui writes: “Poverty was not just about money. It is about access to power. It is deprivation not only in economic terms, but also at the social and political level.” The people of Karachi face this lack of access on a daily basis, one of the driving facts about poverty in Karachi.

The emphasis on business and finance in the city in order to better benefit Pakistan’s foreign affairs has harmed the local community. In doing so, there is a large gap in the socioeconomic ranks. Initiatives like UNDP’s program work to make the best of the given situation; however, until the governing authorities rectify the social and physical injustices, the citizens of Karachi will continue to suffer from this gap.

– Emma Fellows
Photo: Flickr

India's GoodsPrime Minister Narendra Modi has seen the biggest marker of his reformation efforts take hold in the Indian Parliament: the upper house unanimously approved the creation of a countrywide sales tax entitled the Goods and Services Tax.

If passed, the new tax will replace over a dozen levies around the country currently making difficult barriers for trade and market share between the states of India. Goldman Sachs has called this move “one of the world’s most compelling” events in the global economy.

By the end of the year, India’s Goods and Services Tax will have been passed or denied. If passed, it will revolutionize the way Indian economics currently operate and how the national market will interact with the global market.

Experts in business are describing India as a “caged tiger” that will be unleashed on the world. This shift could make India’s emerging market wildly profitable.

Many in the nation are excited, proved by the unanimous decision in the upper house. Once the lower house and over half the states approve the bill, it will be written into law and implemented. However, this process may still be lengthy.

Among other barriers, a new council must be created to bring together experts to manage the new tax and how much will be taxed. The Prime Minister’s administration plans to train 60,000 tax officials to help the entire nation transition.

Modi sees India’s Goods and Services Tax as a victory for the entire country, exclusive of party alliance. He hopes this will be step in the right direction for all in the areas of democracy and dismantling “tax terrorism.”

Although Modi had to compromise in order to pass the bill, the most recent state elections secured him a majority of representatives in the upper house who supported the bill, creating a tide that yielded the unanimous vote.

With this landmark vote, Modi and his administration firmly believe the country is ready to make the change, and look forward to one of the most drastic moves in the country in the last couple decades.

Connor Borden

Photo: Flickr

Foreign Aid: What Could Your One Percent Do?In a recent poll, 81 percent of Americans said they believe that the U.S. has “a moral responsibility to work and reduce hunger and severe poverty in poor countries.” However, Americans also think that America is already spending a significant portion of its annual budget on foreign aid; when polled, some Americans thought the U.S. spent as much as 30 percent, more than is actually spent on Social Security or Medicare, when in reality only about 1 percent of the budget is allocated to foreign aid.

And while 1 percent of the American budget is a large sum in absolute dollars, even compared to other developed nation’s foreign aid spending, America does not rank in the top 15 industrialized countries when compared to the percent of its gross national income. Britain, who does make the top 15, spent about 6 percent of its gross national income in 2012, so while they are spending less money in actual dollars, they are willing to allocate a higher percent of their budget toward assisting economically struggling countries.

As the American foreign assistance budget stands now, citizens pay pennies on the dollar toward saving and improving the lives of people living in poverty. The average median income for residents of Washington State in 2013 was $58,405. Households making the median annual income would have paid roughly $10,000 in income taxes. Of their tax money, about $100 would have been put toward foreign aid.

Foreign aid dollars are worked in a variety of ways. In 2012, the economic assistance budget of about $31 billion was split among spending on development assistance, migration and refugee assistance, international narcotics control and law enforcement, and global health and child survival. According to a tax calculator created by the nonprofit ONE.org, that family’s $100 could have been used to provide someone with 268 days of HIV treatments, 61 life-saving vaccines or 11 bed nets that save lives.

Tax season is understandably not everyone’s favorite time of year, but it is good to know not only where our dollars are being spent, but also the amount of good they can do. Even with only a small percentage of our taxes being spent on foreign aid, they are managed through effective programs that make real differences.

Brittney Dimond

Sources: Gates Notes, One, OFM, National Priorities, OXFAMAmerica
Photo:  Flickr