Bloomberg News

Pakistan Aid Must Be Tied to Tax, U.K. Lawmakers Say

April 03, 2013

U.K. development aid for Pakistan should be conditional on greater efforts by the South Asian nation’s government to tax its wealthy elite, lawmakers said.

The International Development Committee of the House of Commons also called today for any increase in U.K. assistance to be more closely tied to efforts to promote the rule of law and fight corruption. The U.K. will give Pakistan 376 million pounds ($569 million) in aid this year.

“The committee is concerned that not enough tax is raised in Pakistan to fully finance improvements in the quality of life for poor people,” the cross-party panel’s chairman, Liberal Democrat lawmaker Malcolm Bruce, said in a statement. “We cannot expect people in the U.K. to pay taxes to improve education and health in Pakistan if the Pakistani elite does not pay meaningful amounts of income tax.”

Pakistan was among the 15 lowest revenue-gathering nations in the world as a percentage of gross domestic product, according to the U.S. Central Intelligence Agency’s 2012 World Factbook. The country recorded the highest budget deficit in two decades in the fiscal year through June as it missed its tax target.

About 856,000 of the country’s 183 million people pay tax, according to the Federal Board of Revenue. Each taxpayer contributes on average 13,673 rupees ($139).

In December, the government approved a plan to offer 3 million of Pakistan’s richest tax evaders a chance to pay a one- time 40,000-rupee penalty on undeclared income and assets of as much as 5 million rupees, in an effort to widen the tax net.

To contact the reporter on this story: Gonzalo Vina in London at gvina@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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