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London, April 4: Britain should stop giving aid to Pakistan unless its politicians and wealthy elite pay their fair share of taxes, a landmark report from the Commons Select Committee on International Development said today.
The report makes it clear that Britain applies different standards to India and Pakistan on the question of aid.
Tabloid newspapers such as The Daily Mail have been campaigning for aid to India to be stopped because the country has more millionaires than Britain and even an ambitious space programme with plans to send a mission to Mars. Aid to India is worth about £1 billion over four years and the idea is that when the current programmes end, the guiding philosophy will be “trade instead of aid”.
With Pakistan, in marked contrast, Britain wants to use aid to help Pakistan make the transition to a “successful Islamic democratic republic”, though it does not explain whether a country can be simultaneously “Islamic” and “democratic” as these terms are understood in the west.
The government is planning to increase aid to Pakistan from £267 million in 2012-13 to £446 million in 2014-15, a rise of 67 per cent, making it the largest recipient of UK aid.
On the face of it, the report has a tough warning for Pakistan — reform the tax system or we will stop the aid.
“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,” the 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.”
The MPs on the select committee appear to be aware that the ordinary Briton is resentful that at a time of economic hardship aid should be given to a country as deeply unpopular as Pakistan, especially as a number of British-born Pakistanis appear determined to cause the donor the maximum amount of damage through terrorist activities.
“We cannot advocate that the British people finance, through taxation, the proposed substantial increase in development assistance to Pakistan unless there is clear evidence that the newly elected Pakistan government is also willing to make the necessary changes so as to contribute more to improving the livelihood of its people,” the report goes on.
“In the past, donor money has not been spent effectively in Pakistan for a variety of reasons,” it said. “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.” During their inquiry MPs were told that 70 per cent of the nation’s MPs do not file a tax return.
The committee criticised the Department for International Development (DfiD) for failing to do more to tackle corruption, frequent absences in the rule of law and low tax collection at the top of the agenda for its governance work in Pakistan.
In reality, the British government does not want Pakistan to sink into further chaos and will almost certainly keep on giving aid even if the reforms demanded are not forthcoming.
Malcolm Bruce, chairman of the committee, acknowledged: “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.”
A DfID spokesman said: “We have made it clear to government and opposition politicians in Pakistan that it is not sustainable for British taxpayers to fund development spend if Pakistan is not building up its own stable tax take.”
Britain has long suspected that most terrorist acts in Britain have a Pakistan connection but fears the situation would get worse if UK investment in such areas as education was reduced.
A recent opinion poll conducted by the British Council among Pakistani voters aged 18 to 29 came up with deeply pessimistic findings. An overwhelming 96 per cent said the country was headed in the wrong direction.
Just 29 per cent chose democracy as the best system for Pakistan, with 38 percent favouring sharia.
The select committee heard a number of key witnesses, among them Sir Michael Barber, DfiD’s special representative on education in Pakistan.
“First, let me say that, as I am sure you know, Pakistan is a very, very important country for Britain,” said Barber. “We have deep cultural, social, political and historical links with Pakistan. It is a place that is important from an economic and social point of view as well as security and other points of view.”
He also said: “Secondly, unless Pakistan is able to fix its education problem, among the many other problems it faces, it will not be – it cannot be – the thriving, successful Islamic democratic republic that we would all like it to be.”
Another witness, Dr Ehtisham Ahmad, Visiting Senior Fellow, Asia Research Centre, London School of Economics, said: “I spent a career in the IMF and at the end of that career I represented the Government of Pakistan as senior advisor on the board, and was part of the Pakistan team negotiating the last programme, the 2008 programme, for Pakistan. I resigned at the end of 2009. It is really unconscionable for this country to be stuck at 9 per cent of GDP because the President does not want to be taxed, or half the Parliament do not pay taxes.”
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