Pakistani elite must pay more in tax to justify UK aid spending, say British MPs

Members of the Britain's International Development Select Committee have said UK aid should be linked to Pakistani tax rises

by The Commentator on 4 April 2013 00:46

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In an effort to boost tax revenues for the Pakistani government and broaden the tax base, British MPs have insisted that the UK should not donate more in aid money to Pakistan until the country's own wealthy elite pay more.

Pakistan is set to become the largest recipient of UK aid next year and MPs remarked that although there is a "powerful case" for continuing aid to the nation, British taxpayers must not be left to foot the growing bill unless Pakistan's wealthy are made to pay their fair share.

The House of Commons International Development Select Committee said in a new report: "Any increase in the UK's official development assistance to Pakistan must be conditional on Pakistan increasing its tax collection and widening the tax base.

"We cannot expect the people in the UK to pay taxes to improve education and health in Pakistan if the Pakistan elite is not paying income tax.

"We cannot advocate that the British people finance, through taxation, the proposed substantial increase in development assistance to Pakistan unless there is clear evidence that the newly elected Pakistan government is also willing to make the necessary changes so as to contribute more to improving the livelihood of its people.

"In the past, donor money has not been spent effectively in Pakistan for a variety of reasons. Corruption is rife in a social order based on patronage and kinship networks. Pakistan's rich do not pay taxes and exhibit little interest in improving conditions and opportunities for Pakistan's poor."

MPs were told that while one in three people in Pakistan live on less than 30p a day, around 70 percent of the Pakistan's MPs do not file a tax return.

The committee also stated that it wants Prime Minister David Cameron to push for action on corruption and tax evasion with Pakistan's leadership and called for the government to use its influence within the International Monetary Fund to press for urgent reform of the tax system.

The British Government currently plans to increase its £267 million bilateral aid programme in Pakistan, which has one of the smallest tax bases in the world.

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