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The UK is to provide Pakistan with expert assistance on tax collection and enforcement, implemented through high-level dialogue between HM Revenue and Customs and Pakistan's Federal Board of Revenue.
Pakistan is currently seeking to widen the country's tax net to include the wealthy, and it wants to raise 15 percent of GDP from tax revenues by 2018. The country's economic reform plans were recently agreed in principle by the International Monetary Fund.
The announcement was made by UK International Development Secretary Justine Greening during a visit to the country. She described the May election in Pakistan as a "milestone," and said that she had heard "encouraging plans" from Pakistan's new government about how it intends to rebuild the economy, create jobs and reduce poverty.
She also called on Pakistan's new leaders to lead by example, stating that: "By paying their taxes and backing reform, business, the wealthiest individuals and elected politicians in Pakistan can show their commitment to a more vibrant future for ordinary Pakistanis."
The UK's support complements a technical assistance program provided by the World Bank.
Greening also highlighted UK initiatives with provincial governments across Pakistan, including help with setting up a new revenue collection office in Khyber Pakhtunkhwa, and work to ensure taxes are collected and spent transparently in Punjab.
The UK also plans to expand a skills training scheme provided in conjunction with the Government of Punjab which has so far seen more than half of all unemployed trainees find a job inside six months. The scheme will now provide jobs training for 135,000 people in Punjab, nearly half of whom will be women. It will focus on jobs in in high demand, such as mechanics, tailors and cooks.
In April, the UK House of Commons International Development Committee called on aid to Pakistan to be linked to tax reform, complaining that the country's wealthy elite was not paying "meaningful" levels of income tax. At the time, committee chair Malcolm Bruce called on the UK "do all it can to encourage Pakistan to implement effective tax collection as part of wider reforms designed to foster inclusive economic and social development for all sections of society."
UK Prime Minister David Cameron has described capacity-building as a key priority, and in January he highlighted that UK involvement in improving tax collection in Ethiopia over the past decade had led to a seven-fold increase in revenue collection.
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