UK should assist Pakistani tax reform

Published 06 April 2013  |  

The UK Government should use aid to help Pakistan implement tax reform, says Christian Aid.

The development agency welcomed a new parliamentary report recommending Pakistan raise its low rate of tax collection.

However it has raised concerns about the suggestion that UK aid should be tethered to improvements in the country's tax system.

Barry Johnston, Christian Aid's Senior UK Political Adviser, said there was a "great deal" to welcome in the International Development Committee's report on Pakistan.

"We all agree that taxes are a vital route out of poverty and aid dependency and clearly, Pakistan has a long way to go to get its house in order. In the interim, great human need exists," he said.

"Sixty million people in Pakistan live on less than 30p a day – and MPs are right to recognise the value of the UK's aid to the country."

However, he said it could be "extremely damaging" if the UK makes future increases in aid to Pakistan conditional on the country implementing a more efficient tax system.

This would be the case if Pakistan suffers more devastating floods or other natural disasters like another earthquake, he warned.

Instead of making aid increases dependent on tax reform, Christian Aid said the UK should use aid and technical assistance to help Pakistan to build a fairer and stronger tax system, and cut down on the global financial secrecy aiding Pakistan's wealthy tax evaders.

Mr Johnston said: "People living in poverty suffer most in such disasters – and they urgently need development aid to fund more schools and hospitals."

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