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February 5, 2013

UK committee confronts Pak politicians on tax issues

February 5, 2013

ISLAMABAD: The United Kingdom’s parliamentary committee on international development has demanded of its government to confront Pakistani politicians on their mass scale tax evasion and check if any political party has included a tax agenda in its manifesto.
“Why do you not look them in the eye and say, ‘I pay taxes in the UK, are you paying taxes in Pakistan?” asked Sir Malcolm Bruce, chairman of the committee, while addressing to the minister for international development, Justine Greening.
The Centre for Investigative Reporting in Pakistan (CIRP) tax report on politicians remained a dominant factor in the proceedings. The chairman of the committee was shocked to note that around 70 percent of Pakistani MPs don’t pay taxes.
The minister in response said she would raise the tax issue during her visit to Pakistan. At this, the chairman of the committee reacted: “We expect results.” A transcript of the committee’s proceedings obtained by The News revealed the unrest of the UK parliament over tax evasion by their Pakistani counterparts. Earlier, US secretary of state Hillary Clinton had invited the wrath of the government by declaring that the rich don’t pay taxes in Pakistan.
Recalling a quote of the International Development Minister, Justine Greening, that she would “like to cut through the crap,” Malcolm Bruce said to the minister: “That is your quote. The Pakistani MPs and people in high positions are behaving completely inappropriately, so is this not one of the instances where we should be cutting through the crap?”
The chairman of the committee said the Pakistani government accepts aid: “they are taking our taxes, not paying their own taxes; they have billions of pounds in bank accounts, and yet they are looking for money from the IMF.” Everybody collectively says, he continued: “Oh, well, we expect them to do something.”
They have had plans in the past to raise their tax base. It has gone down, not up, he

said. What influence do we have, and to what extent is our engagement giving us leverage over what they do? To put it at its most negative, he said, are they saying, “We will take your money and do what we please”?
The minister responded by saying she is very clear on the issue and understands that tax compliance will have to “start from the top and work its way down.”
At the moment, the minister said, there are 70% of Pakistan’s MPs who are not filing a tax return. There is no doubt in my mind that if there are difficult reforms, particularly on tax, to be gone through in Pakistan, it is important that ordinary Pakistani people can see that these tax reforms apply to every body, she said. As we know in our own democracy, the minister told the parliamentary committee, showing a fair tax system that is equal to everybody is important.
The minister said she would not like to “stray into legal issues within Pakistan in relation to particular politicians, but I can assure the committee that I was very clear that I do think they will need an overall tax strategy, and I do think that has to be seen to apply to every body, as it does in any country, if it is to be successful.”
Fiona O’Donnell, another member of the committee recalled his visit to Pakistan and heard common people saying: “I do not pay my taxes because the government is so corrupt that it does not do any good, so I would rather engage in private philanthropy.” Then as long as people are not paying tax, they do not feel they have a stake in holding the government to account, he continued.
Responding to his commentary, Justine Greening said that by the end of the day it is for the political leadership of Pakistan to take those decisions, and it will require a real political will if they are to be taken forward successfully.She said tax agenda is a challenging issue and is facing hurdles but the signs are encouraging that reform is taking place.

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