During Ramadan, Pakistanis dodge tax collectors
Karachi: During the Muslim holy month of Ramadan, Muhammad Tashfeen Khan does what millions of other Pakistanis do: tries to keep his money from the government's religious tax collectors.
The wealthy businessman pulls all his savings from his bank account right before Ramadan starts so the government cannot deduct 2.5 per cent as zakat, the annual donation many Muslims are religiously required to make as a basic tenet of the Islamic faith.
Khan and many other Pakistanis do this, not to avoid paying zakat, but to make sure the money doesn't go to the government, which is viewed by most people as incompetent and corrupt.
For many years, Pakistan required all Sunni Muslims, who make up a majority of the country's population, to pay zakat straight to the government. That regulation changed recently, but many Pakistanis seem unaware and continue to pull their money out of the banks to elude the state.
Instead, they pay zakat to needy individuals and hundreds of private charities operating in the country some of which are actually fronts for Islamist militant organisations seeking money for both social welfare activities and militant activity.
"When it comes to zakat, or any other religious issue, I can't trust the government," said Khan, who runs a chain of private schools in the southern port city of Karachi. It's a "corrupt system, which hardly cares about the poor," he said.
A former religious affairs minister was imprisoned last year for allegedly cheating hundreds of thousands of Pakistani Muslims out of money while they were making the annual Hajj pilgrimage to Saudi Arabia.
Khan said he gives over USD 1,000 to individuals and private charities every Ramadan, an amount he indicated was greater than what he would pay if the government deducted zakat from his bank account.
Ramadan began in July and is expected to end in the next few days, depending on the sighting of the new moon.
"By taking matters in my own hands, I am satisfied that it goes to the deserving people and charity organisations," said Khan.
Many Pakistanis apparently feel the same way, and use his same bank trick, based on evidence from how much the government collects in zakat from bank accounts versus how much money is in those accounts.
Last year, the government collected a little over 1 billion rupees (USD 11.5 million) from savings and fixed deposit accounts at the beginning of Ramadan, said Syed Wasimuddin, the spokesman for the State Bank of Pakistan.
That figure equals only about 0.3 per cent of the 320 billion rupees (USD 3.4 billion) that was in those accounts in June 2011, before Ramadan started, according to data posted on the State Bank's website far below the official 2.5 per cent zakat tax rate.