MPs: Link Pakistan aid to taxes

Britain must only go ahead with a major increase in aid to Pakistan if the nation increases the amount of tax it collects from its own wealthy people, a Commons committee has recommended.

Pakistan's elite must pay 'meaningful' amounts of tax

Sir Malcolm Bruce, chairman of the Commons International Development select committee, says UK tax payers cannot be expected to fund aid to Pakistan if the country's wealthy do not pay "meaningful" amounts of income tax.

There is a powerful case for maintaining the UK's bilateral aid to Pakistan. Britain enjoys a close relationship and has long established ties with Pakistan which has real poverty and serious security problems...But the committee is concerned that not enough tax is raised in Pakistan to fully finance improvements in the quality of life for poor people. In particular, we cannot expect people in the UK to pay taxes to improve education and health in Pakistan if the Pakistani elite does not pay meaningful amounts of income tax.

– Committee chairman Sir Malcolm Bruce

Around 70% of Pakistan's MPs 'do not file a tax return'

The Government plans to increase its £267 million bilateral aid programme in Pakistan, which has one of the smallest tax bases in the world, for the financial year that ends today to £446 million in 2014/15.

During their inquiry into UK aid to Pakistan, MPs from the Commons International Development select committee were told that while one in three people in Pakistan live on less than 30p a day around 70 percent of the nation's MPs do not file a tax return.

The committee indicated 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.

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MPs: Link Pakistan aid boost to taxes on its wealthy

Britain must only go ahead with a major increase in aid to Pakistan if the nation increases the amount of tax it collects from its own wealthy people, a Commons committee has recommended.

Pakistan will become the largest recipient of UK aid next year, a controversial move given the backdrop of corruption, tax avoidance and political instability, MPs warned.

Pakistan will become the largest recipient of UK aid next year. Credit: Reuters

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 Commons International Development select committee said

"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," its report states.

"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."