US Treasury Dept: Pakistan Must Raise Taxes

Deputy Treasury Secretary Says Pakistan Needs VAT

by Jason Ditz, February 12, 2010

In comments published today in a Pakistani business paper, US Deputy Treasury Secretary Neal Wolin pressed for Pakistan to dramatically raise taxes, insisting that “Pakistanis pay less for their government than nearly any other country in the region.”

Secretary Wolin

To that end, Secretary Wolin urged Pakistan’s parliament to enact value-added tax (VAT) legislation. The comments echoed those made in September by the International Monetary Fund.

In both cases the comments were aimed at reducing Pakistan’s growing dependence on foreign aid, but coming from a US Treasury official they may prove to exacerbate the growing Pakistani resentment over what they see as internal meddling by America.

With Pakistan’s economy in tatters, there has been considerable resistance to the flurry of calls to increase taxes in the nation. With the Zardari government looking to increase spending across the board and the cost of its assorted military campaigns spiraling, the nation will probably be looking to US and other foreign aid for the forseeable future.

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