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| Version 1 | Version 2 |
|---|---|
| Stop UK aid to Pakistan unless taxes increase, urge MPs | Stop UK aid to Pakistan unless taxes increase, urge MPs |
| (about 1 hour later) | |
| The UK government should withhold extra aid to Pakistan unless the country does more to gather taxes from its wealthier citizens, a group of MPs has said. | |
| The International Development Committee said British taxpayers should not be paying for health and education in Pakistan while rich Pakistanis were paying little tax. | The International Development Committee said British taxpayers should not be paying for health and education in Pakistan while rich Pakistanis were paying little tax. |
| They also urged ministers to ensure aid was focused on anti-corruption efforts. | They also urged ministers to ensure aid was focused on anti-corruption efforts. |
| Ministers said they were committed to ensuring tax reform took place. | Ministers said they were committed to ensuring tax reform took place. |
| The government is planning to double the amount of aid it provides to Pakistan from £267m in 2012-13 to £446m in 2014-15, making it the largest recipient of UK aid. | The government is planning to double the amount of aid it provides to Pakistan from £267m in 2012-13 to £446m in 2014-15, making it the largest recipient of UK aid. |
| The committee accepted there was a "powerful case" for maintaining bilateral aid to Pakistan, which has "long-established ties" with the UK and "real poverty and serious security problems". | The committee accepted there was a "powerful case" for maintaining bilateral aid to Pakistan, which has "long-established ties" with the UK and "real poverty and serious security problems". |
| 'Pakistani elite' | 'Pakistani elite' |
| But the MPs said they could not support the use of British taxpayers' money for aid in Pakistan without ensuring the new Pakistani government, to be elected in May this year, was committed to reforming the tax system. | But the MPs said they could not support the use of British taxpayers' money for aid in Pakistan without ensuring the new Pakistani government, to be elected in May this year, was committed to reforming the tax system. |
| The report said Pakistan had a lower-than-average tax take, with only 0.57% of Pakistanis - 768,000 individuals - paying income tax last year. In comparable countries, the level is about 15%. | |
| The committee also criticised the Department for International Development (DfID) for failing to put corruption, frequent absences in the rule of law and low tax collection at the top of the agenda for its governance work in Pakistan. | The committee also criticised the Department for International Development (DfID) for failing to put corruption, frequent absences in the rule of law and low tax collection at the top of the agenda for its governance work in Pakistan. |
| Lib Dem Sir Malcolm Bruce, chairman of the cross-party committee, said there was no issue with providing aid to help Pakistan's poorest people, but "it was a question of how justified it is to increase it rapidly at a time when wealthiest people in Pakistan are paying little or no tax". | |
| He told the BBC Radio 4's Today programme: "Unless [Pakistan is] prepared to work with us to deliver real improvements in health, education and poverty reduction, then we can't be expected to go on providing money from taxpayers in Britain earning less than wealthy non-taxpayers in Pakistan." | |
| The MPs recommended that as a "significant friend" of Pakistan the UK should "do all it can" to encourage effective tax collection. | The MPs recommended that as a "significant friend" of Pakistan the UK should "do all it can" to encourage effective tax collection. |
| They called on DfID to work with other donor countries and the International Monetary Fund to push for reform of Pakistan's tax system and back a national campaign to build domestic political momentum for change. | |
| The committee also said corruption was "rife" in Pakistan, where society was "based on patronage and kinship networks". | The committee also said corruption was "rife" in Pakistan, where society was "based on patronage and kinship networks". |
| Pakistan's measures | |
| Sir Malcolm added: "It is vital for Pakistan, and its relations with external aid donors, that the new government provides clear evidence that it will own and implement an effective anti-corruption strategy. | Sir Malcolm added: "It is vital for Pakistan, and its relations with external aid donors, that the new government provides clear evidence that it will own and implement an effective anti-corruption strategy. |
| "DfID must likewise set measurable targets against which to measure and confirm positive impacts arising from effective investment in anti-corruption measures." | "DfID must likewise set measurable targets against which to measure and confirm positive impacts arising from effective investment in anti-corruption measures." |
| Pakistan High Commissioner Wajid Shamsul Hasan said the tax collection net had been increased from 1,000bn Pakistan rupees (£6.72bn) at the beginning of the century to 2,000bn rupees by the end of 2012, with a "substantial increase in the number of taxpayers". | |
| And although figures showed that 69% of National Assembly members and 63% of Senate members did not pay taxes in 2011, Mr Hasan said that people who had not paid taxes were now banned from running for public office. | |
| He urged Britain to continue providing aid to Pakistan: "I would say that they should paying knowing well what sort of problems we have [been] put into by this 30-year-long war against terrorism in the region, first when the Soviet Union occupied Afghanistan we had to be face the main brunt of the war, and now we have to continue to face the main brunt. | |
| "We have spent $67bn (£44bn) since 2011 in this war against terror, our infrastructure has been destroyed, our education has been destroyed." | |
| Post-election reform | |
| A spokesman for DfID said the report "rightly sets out the urgent need for the incoming Pakistan government to deliver tax reform". | A spokesman for DfID said the report "rightly sets out the urgent need for the incoming Pakistan government to deliver tax reform". |
| He added: "Reform must start from the top down, with elected politicians and the wealthiest in Pakistan showing a commitment to reform by submitting tax returns and paying tax due. | He added: "Reform must start from the top down, with elected politicians and the wealthiest in Pakistan showing a commitment to reform by submitting tax returns and paying tax due. |
| "The UK government is clear that UK development assistance in Pakistan is predicated on a commitment to economic and tax reform and to helping lift the poorest out of poverty. | "The UK government is clear that UK development assistance in Pakistan is predicated on a commitment to economic and tax reform and to helping lift the poorest out of poverty. |
| "We have made it clear to government and opposition politicians in Pakistan that it is not sustainable for British taxpayers to fund development spend if Pakistan is not building up its own stable tax take. | "We have made it clear to government and opposition politicians in Pakistan that it is not sustainable for British taxpayers to fund development spend if Pakistan is not building up its own stable tax take. |
| "Following the election we will make available practical assistance to the incoming government to help deliver reform of the Pakistan tax system and work with the IMF, but tax and economic reform must take place." | "Following the election we will make available practical assistance to the incoming government to help deliver reform of the Pakistan tax system and work with the IMF, but tax and economic reform must take place." |