x Abu Dhabi, UAE Thursday 20 July 2017

Britain tells Pakistan to start collecting more taxes or aid will stop

British parliamentary committee says it is unfair for Britain to fund health and education projects unless Pakistan's new government, due to be elected in May, tackles 'rife' corruption and tax evasion.

LONDON // British legislators want Pakistan to make its wealthier citizens pay more taxes as a condition for a major increase in aid.

Britain is due to double its assistance to Pakistan to £446 million (Dh2.46 billion) in 2014-2015, making it the biggest recipient of British aid.

But parliament's international development committee says it is unfair for Britain to fund health and education projects unless Pakistan's new government, due to be elected in May, tackles "rife" corruption and tax evasion.

"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," the committee said yesterday.

"Pakistan's rich do not pay taxes and exhibit little interest in improving conditions and opportunities for Pakistan's poor."

Citing figures from the Pakistan board of revenue, the committee said only 0.57 per cent of Pakistanis paid income tax last year - and that no one has been prosecuted for income tax fraud for at least 25 years.

Less than 30 per cent of Pakistan's members of parliament pay tax, it added.

The committee said there was a "powerful case" for continuing its aid programme to Pakistan, a country with "real poverty and serious security problems" as well as strong links to its former colonial power.

But it added that past donations have often failed to reach poor Pakistanis because of corruption.

Britain's international development ministry said aid to Pakistan - a nuclear-armed state - was "predicated on a commitment to economic and tax reform".

"We have made it clear to government and opposition politicians in Pakistan that it is not sustainable for British taxpayers to fund development if Pakistan is not building up its own stable tax take," a spokesman said.

"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."