MPs: Link Pakistan aid to tax reform

3 April 2013 Last updated at 19:30 ET

The UK plans to double the amount of aid it provides to Pakistan

The UK government should withhold extra aid to Pakistan unless it does more to gather taxes from its wealthier citizens, a group of MPs has said .

The International Development Committee said British taxpayers should not be paying for health and education in Pakistan while rich Pakistanis were paying little tax.

They also urged ministers to ensure aid was focused on anti-corruption efforts.

Ministers said they were committed to ensuring tax reform took place.

The government is planning to double the amount of aid it provides to Pakistan from £267m in 2012-13 to £446m in 2014-15, making it the largest recipient of UK aid.

The committee accepted there was a "powerful case" for maintaining bilateral aid to Pakistan, which has "long-established ties" with the UK and "real poverty and serious security problems".

'Pakistani elite'

But the MPs said they could not support the use of British taxpayers' money for aid in Pakistan without ensuring the new Pakistani government, to be elected in May this year, was committed to reforming the tax system.

The report said Pakistan had a lower-than-average tax take, with only 0.57% of Pakistanis - 768,000 individuals - paying income tax last year.

The committee also criticised the Department for International Development (DfID) for failing to put corruption, frequent absences in the rule of law and low tax collection at the top of the agenda for its governance work in Pakistan.

Lib Dem Sir Malcolm Bruce, chairman of the cross-party committee, said: "The committee is concerned that not enough tax is raised in Pakistan to fully finance improvements in the quality of life for poor people.

"In particular, we cannot expect people in the UK to pay taxes to improve education and health in Pakistan if the Pakistani elite does not pay meaningful amounts of income tax."

The MPs recommended that as a "significant friend" of Pakistan the UK should "do all it can" to encourage effective tax collection.

It called on DfID to work with other donor countries and the International Monetary Fund to push for reform of Pakistan's tax system and back a national campaign to build domestic political momentum for change.

The committee also said corruption was "rife" in Pakistan, where society was "based on patronage and kinship networks".

'Not sustainable'

Sir Malcolm added: "It is vital for Pakistan, and its relations with external aid donors, that the new government provides clear evidence that it will own and implement an effective anti-corruption strategy.

"DfID must likewise set measurable targets against which to measure and confirm positive impacts arising from effective investment in anti-corruption measures."

A spokesman for DfID said the report "rightly sets out the urgent need for the incoming Pakistan government to deliver tax reform".

He added: "Reform must start from the top down, with elected politicians and the wealthiest in Pakistan showing a commitment to reform by submitting tax returns and paying tax due.

"The UK government is clear that UK development assistance in Pakistan is predicated on a commitment to economic and tax reform and to helping lift the poorest out of poverty.

"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.

"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."

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Obama demands Congress 'finish the job' on immigration reform - Washington Post

President Obama helped swear in 28 newly naturalized U.S. citizens at the White House on Monday, using the occasion to demand that Congress “finish the job” on his push for a comprehensive overhaul of immigration laws.

In a ceremony in the East Room, Obama hailed the new Americans, including 13 who already serve in the U.S. military, as examples of the nation’s strong immigrant history and argued that lawmakers must no longer avoid tackling immigration reform.

“Immigration makes us stronger; it keeps us vibrant, it keeps us hungry, it makes us prosperous. It’s part of what makes this a dynamic country,” Obama said. But, he added: “We need to do a better job welcoming them. We’ve known for years that our immigration system is broken.?.?.After avoiding the problem for years, the time has come to fix it once and for all.”

The president has participated in a naturalization ceremony for new citizens at the White House for the past four years, but this year’s event took on heightened symbolism. Obama read a list of countries that the immigrants hailed from — including Afghanistan, Germany, Mexico, Nigeria and Peru — and some of the new citizens wore their U.S. military uniforms. They raised their right hand while reciting an oath of citizenship at the direction of Homeland Security Secretary Janet Napolitano.

Obama praised bipartisan efforts underway in the Senate and House to develop reform legislation, and said he expects a bill to be introduced next month. A bipartisan group of eight senators has said it hopes to unveil its bill after the Senate returns from a two-week Easter break April 8.

The Senate effort, widely expected to serve as a template for a potential deal between Congress and the White House, will include a 13-year path to citizenship for the nation’s 11 million illegal immigrants, a large increase in visas for high-tech workers, a new guest-worker program for low-wage foreigners, and the elimination of some categories of visas for extended family members, according to people familiar with the negotiations.

The legislation also will call for increased border control and work-place security measures.

“We’ve got to finish the job. This issue is not new,” Obama said. “Everyone pretty much knows what’s broken; everyone knows how to fix it. .?.?.We’ve just got, at this point, to work up the political courage to do what’s required to be done.”

Senate aides have said they expect the bipartisan bill to be written during the Easter break, despite an ongoing dispute from labor and business leaders over terms of a guest worker program for foreigners. Under the proposal, up to 200,000 immigrants a year would be granted visas for low-skilled jobs for which not enough American workers are available.

But the U.S. Chamber of Commerce and the AFL-CIO have disagreed over how much those immigrants should be paid, with labor leaders saying they are concerned that the program could drag down wages for all workers.

The Senate aides said they do not think the dispute will stop the bill from remaining on schedule. In the House, Speaker John A. Boehner (R-Ohio) has said a bipartisan group has wrapped up its work on a bill that could be introduced in the next few weeks.

Immigration advocates hailed the White House ceremony Monday as an example of why the promise of becoming a citizen is so important to those who leave home countries to come to the United States.

“Citizenship is more than a process,” said Frank Sharry, executive director of America’s Voice, “it speaks to who we are as a nation. It ensures that the energy and aspirations that drove these new citizens to our country in the first place keep our nation vital and moving forward.”

In his remarks, Obama noted some of the personal stories of the new citizens, noting one man from Ukraine had come to the country when he was 11-years-old and joined the U.S. Air Force in order “to give back to the country.” Another man from Nigeria, who is pursuing a doctorate in information technology, wants to be a professor, Obama said.

“As we look out across this room, we are reminded what makes somebody American is not just their blood lines, not just an accident of birth — it’s a fidelity to our founding principles,” Obama said, “a faith in an idea that anyone, anywhere can write the next great chapter in this American story.”

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