Pakistan Aid 'Should Be Linked To Taxes On Rich'

Britain should withhold extra aid to Pakistan unless the country boosts the amount of tax it collects from its own elite, a group of MPs has said.

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

And members of the Commons International Development select committee said British taxpayers must not be left to foot the growing bill unless Pakistan's wealthy are made to pay their fair share.

"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.

Many of Pakistan's rich pay no taxes as millions live in slums

"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."

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

During their inquiry MPs were told that while one in three people in Pakistan live on less than 30p a day around 70% 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.

It also 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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