Aid to Pakistan ‘conditional’ to tax reforms: UK minister

LONDON: Britain’s International Development Minister Desmond Swayne has said that his country has made some of the over £250 million annual aid to Pakistan “conditional” with radical tax reforms.
In an exclusive interview with this correspondent, the British minister said Britain was satisfied that Pakistani govt is making efforts to increase the tax base in order to create its own resources.
Last week, Swayne visited Pakistan, meeting ministers, senior officials and leading business and civil society figures. He held extensive meetings with Chief Minister Punjab Shahbaz Sharif and Finance Minister Ishaq Dar to review the progress made in areas of education, health and tax reforms.
“We are providing technical assistance to Finance Ministry in order to enable them to collect more tax. I regard it as a very very important issue and that’s why we have made some of our aid conditional upon Pakistan’s ability to raise more taxes and making a good job of it. They are improving,” he said.
The minister said that Britain’s development resources are increasingly in demand as there are “all sorts of crisis all over the world and it was important that countries like Pakistandidn’t rely on foreign aid forever or took it for guaranteed.
The minister explained that the UK has demands from the UN to “provide funds for schools in Palestine, there was earthquake in Nepal recently, there was a recent issue of Ebola virus, there are problems in Yemen, Lebanon and South Sudan. There is a great del of demand on the resources we have and the developing countries have to make sure that they raise taxes and revenues effectively and I am glad that Pakistan is improving on that score.”
It has been widely reported that lots of Pakistani lawmakers either don’t pay taxes, lie about their wealth and resources or simply don’t pay at all. The minister, when asked if he afforded to not pay taxes like his Pakistani counterparts, laughed off and said that it will be a scandal if he didn’t and he wouldn’t be able to stay in his role as a parliamentarian or a minister. “ I m paying my tax and I am quite confident that all my parliamentary colleagues are paying taxes too. We get a tax return and we fill it and pay taxes and if we don’t pay then the tax collecting authorities will be chasing us.”
Swayne said that Pakistan needs to be cognisant of this and there is no harm in “naming and shaming that needs to go on that someone relatively wealthy is not paying taxes and the public should have the right to know about it”.
He said that aid to Pakistan is UK’s “largest bilateral programme amounting to around £250 millions a year”. He said that paying taxes isn’t popular but it requires a lot of “political will” and the same resolve is needed “to continue the progress that has been made”.
He said UK and Pakistan are tied in “very strong historical and modern relations with over 1 million British Pakistanis. Pakistan needs aid as it has over 60 million poor people who live on 30p a day or less. Nearly one in 10 of the world’s out of school children live in Pakistan. It’s also the case that Pakistan is strategically a very important country in the region. It’s important for us to build these relations”.
The minister praised Punjab Chief minister Shahbaz Sharif for leading reforms in the province to deliver on the promises made to the donors such as the UK’s DFID. The minister said he was satisfied that UK’s aid was being spent rightly in Pakistan. He said that he witnessed that in Punjab schools, the government has been able to “develop some leading edge technology to ensure that corruption is curtailed, that the aid is not swindled and that series are delivered. They are sending out inspectors armed with computers and GPS system to track the movements of staff to go to schools and health centres to see what’s happening. It shows evidence as to what’s going on its all connected with GSP system to ensure that provision of services are a reality. It’s much more than what we are capable of doing here.”
Swayne said that UK is providing a “great deal of resources to ensure that more children are enrolled in schools”. The minister informed that he has signed an agreement that will provide conditional cash transfers to encourage the poorest families to send their girls and boys to school, aiming to enrol 500,000 children into primary schools by 2017.
“UK support is helping to tackle the education emergency in Pakistan, with more than 6.3 million primary school children benefiting from DFID support. Every full year of extra schooling across the population increases economic growth by up to 1 percentage point, as more people with better reading, writing and maths skills enter the workforce. If educated, healthy, and working, these young people offer a vast source of talent and productivity,” he said.
The minister said that Pakistan has got the challenge of providing jobs to 1 million new entrants into the job sector every year as well dealing with the energy crisis to ensure that the economy continues improving. “That’s going to require transformation in growth of private business sector. Some of the older public industries need to be privatised and Finance Minister of Pakistan Ishaq Dar is working on that and delivering.”