Mrs Clinton, Tax, and the Floods

Although, in the past, one found it difficult to be a fan of Mrs Clinton it seems that she is making herself amenable to being liked in her newer face as the American Secretary of State. When she came to speak at an obscure American liberal arts institution called Vassar College in the early 1990s almost no one went to hear her speak because everyone had had a late night partying.

On a more serious note Pakistan has suffered catastrophic floods. This calamity displaced more than one-tenth of the country’s 160 million strong population. The flooding left up to 2,000 people dead and affected up to 20 million.

Consequently, on the streets of western capitals such as London, efforts for collecting relief funds for Pakistan’s floods are numerously observable. And quite rightly Mrs Clinton observed that the elite in Pakistan is not concerned about the predicament that the country finds itself in. The Pakistani rich are more concerned with their private armies and barbed wire protected premises.

In every country the issue of how public money is collected and spent lies at the heart of political debate and in turn free and fair political debates fashion democracy. In our country this seems not to be the case. Having observed Pakistan’s tendency in not collecting taxes due from the rich, Mrs Clinton also said that the Pakistani government had to expand its tax base so more revenue could be collected to help reconstruction efforts with the floods.

Mrs Clinton found it “absolutely unacceptable” that well-to-do Pakistanis avoided paying their fair share of taxes. And no doubt the poor of Pakistan will agree. Like the the legendary Benazir Bhutto, Mrs Clinton is quick to learn how be become popular in Pakistan.

Mrs Clinton said: “It’s absolutely unacceptable for those with means in Pakistan not to be doing their fair share to help their own people while taxpayers in Europe, the United States and other contributing countries are all chipping in.”

The EU and US have contributed some $450m (£280m) each to the Pakistan flood aid effort and the EU has also offered a trade deal to lift certain duties.

Mrs Clinton went on: “The most important step Pakistan can take is to pass meaningful reforms to expand its tax base.

“The government must require that the economically affluent and elite support the government and people of Pakistan.”

The rich in Pakistani society are the worst offenders. Landlords and industrialists routinely just pay the tax man and not the tax the government should be paid. In fact many Pakistani businessmen in the cotton trade (incidentally 15% of the cotton crop was destroyed by the floods) routinely boast about evading taxes in the expensive restaurants and clubs of South Kensington.

Following the floods, the entire infrastructure of the country needs to be rebuilt with a total reconstruction bill that could potentially be tens of billions of dollars.

But it is hoped that the American foreign minister is not just using the occasion of meeting EU official to pay lip service to the victims of the flood.

Pakistani Law and Democracy will return to the theme of Pakistan’s tax system to duly expand on it later.

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