Thursday, 4 April 2013

Aid to Pakistan - Should the poor pay for the ills of the rich?

‘Pay your tax or aid stops, MPs tell wealthy Pakistanis' reports The Times this morning.

The Times reports that;
"Britain must cancel a huge increase in aid to Pakistan unless the country tackles astonishing levels of tax avoidance among its wealthy elite, ministers have been warned. In a direct challenge to the Governments decision to send more of the aid budget to Islamabad, an influential group of MPs said that British taxpayers were effectively being asked to step in and subsidise huge rates of tax evasion in the country. "
"The total amount of aid sent to Pakistan is expected to rise by a further £180 million to almost £450 million a year by 2015 as it becomes the largest recipient of British bilateral aid. However, less than 1% of the population pay income tax."
Malcolm Bruce: ‘There is a powerful case for maintaining the UK’s bilateral aid to Pakistan,” he added. “But the committee is concerned that not enough tax is raised in Pakistan to fully finance improvements in the quality of life for poor people. Pakistan’s rich must in turn demonstrate a clearer commitment to improving conditions and basic opportunities for all their fellow citizens by paying more in tax than they do under present arrangements.’
Malcolm Bruce makes a valid point. We are in danger of making decisions about poor people because of the actions of wealthy people and to link the two is very dangerous. Aid is used to educate the poor and more critically to provide life saving vaccines that cost pennies. Without such medicine we are condemning the poor to sickness and death because rich Pakistani's won't pay taxes.

However I note in the Times article Gerald Howarth stated that: ‘Countries like Pakistan have got to understand that it is their duty to collect taxes that are due … It is not right that the British taxpayer, particularly in these times of austerity, should be shelling out aid. They are subsidising tax avoidance in Pakistan.

The problem with critics of international aid is the conflation of the two economic groups. Because of the actions of a powerful and wealthy elite the case is then made to punish the poor as they have control or at heart of their countries problems. Lets not forget many of the victims live in desperate circumstances, ones we could not even imagine and the majority of those worst affected are innocent children. Denying vital and life saving medicines to children, wherever, is as about as heartless as it gets.

It's hard to accept Tory criticisms of tax avoidance in Pakistan when in this mornings Guardian splash it is reported (‘Secrets of the rich who hide cash offshore') that millions of internal records have leaked from Britain's offshore financial industry, mainly from the offshore haven of the British Virgin Islands showing according to a former chief economist at McKinsey that wealthy individuals are estimated to have as much as £21trillion stashed in overseas havens.

Dealing with Pakistan and Pakistan's problems is challenging but we must remember where the problem lies. Within those at the top of civic institutions and as well as in government. I include religion which has considerable political influence. It is these institutions and individuals who have let Pakistan's poor down.

Even the hardliners in the UK haven't blamed the poor, so why should they suffer what is simply collective justice? It is dangerous to conflate the two - in Pakistan or elsewhere. There is a more powerful argument that empowerment of the poor will bring about social and economic change

Their maybe anger on the Tory benches over Cameron’s commitment to increase foreign aid but that's the nasty party all over. Aid may not be well spent in some cases and some of it is tied up in bilateral trade but our resolve should be to ensure it benefits the people who need it.

The Prime Minster Minister has protected the Aid budget from cuts, committing Britain to spend 0.7 per cent of economic output on aid. British aid to Pakistan is due to rise from £87 million in 2007-08 to £446 million by 2014-15.