US Secretary of State Hillary Clinton on Tuesday said that Pakistan must tax its elite if it wants to continue receivingfinancial assistance, the Associated Press (AP) reported.
“This is one of my pet peeves: Countries that will not tax their elite who expect us to come in and help them serve their people are just not going to get the kind of help from us that historically they may have,” Clinton told an audience at the US Global Leadership Coalition conference.
“Pakistan cannot have a tax rate of 9 per cent of GDP when land owners and all the other elites do not pay anything or pay so little it’s laughable. And then when there’s a problem everybody expects the US and others to come in and help,” Clinton said. She noted that Pakistan’s finance minister is now presenting a package of economic and tax reforms.
Treasury Secretary Timothy Geithner said the higher bar for US aid will help the US get more for its money.
“Unless we are tougher on how we provide assistance, we should not be financing them at this level,” Geithner said.
Pakistan receives $1.5 billion annually in non-military assistance and has become one of the principal recipients of US aid. The money funds traditional development projects such as schools and clinics but is also meant to strengthen a weak government in a country vital to the US-led war in Afghanistan and its broader struggle against extremists.
Elite hamper broadening of tax net?
Finance Minister Abdul Hafeez Sheikh had previously accused the elite class of hampering the broadening of tax net, adding that they were resisting the imposition of the much-needed flood tax. Addressing members of the Senate, the finance minister said that although the economic situation was challenging, it was not as precarious as being portrayed by some segments.
Published in The Express Tribune, September 30th, 2010.