19 October 2010
Not for the first time, Hillary Clinton, the United States’ Secretary of State, has pointed out that Pakistan, in order to pay, at least in part, for reconstruction after the recent floods, should ensure that the most affluent of its citizens pay their share of taxes.
During a joint press conference in Brussels with the European Union High Representative, Catherine Ashton, she said that: “The international community can only do so much. Pakistan itself must take immediate and substantial action to mobilize its own resources, and in particular to reform its economy.”
“The most important step that Pakistan can take,” she stated, “is to pass meaningful reforms that will expand its tax base. The government must require that the economically affluent and elite in Pakistan support the government and people of Pakistan.”
“I know how difficult this is,” she continued, “but it is absolutely unacceptable for those with means in Pakistan not to be doing their fair share to help their own people while the taxpayers of Europe, the United States, and other contributing countries are all chipping in to do our part.”
She was echoing comments she had made earlier this month, during a roundtable discussion in Washington, when she emphasised that, with Pakistan having a tax to gross domestic product rate of only 9%, there had to be “some reciprocity”, and added that, “when big landholders and all the other elites do not pay anything or pay so little, it’s laughable.”
However, she had then recognised that the country’s government was trying, against some opposition, to put together a package of economic and tax reforms. Pakistan’s Finance Minister, Hafiz Sheikh, has himself protested that the country’s elite continues to hinder the broadening of the country’s tax base, including the introduction of a “flood tax" on incomes above a certain amount.