Clinton Demands Pakistan Tax Hikes

Says US Foreign Aid Contingent on Soaking 'Wealthy Landowners'

by Jason Ditz, September 28, 2010

In comments made earlier today Secretary of State Hillary Clinton reiterated long-standing US demands for major tax increases in Pakistan, insisting that the US might withdraw foreign aid to the Zardari government if they don’t comply.

In particular, Clinton demanded a major increase in taxes against “wealthy landowners” in Pakistan, saying that the government had a duty to tax them at a much higher rate than they currently pay.

The US has been demanding massive increases in taxes and the institution of a value-added tax (VAT) system since early in February. Though Pakistan has largely complied and raised a number of its taxes, the US has continued to press for more and more tax hikes.

This comes on the basis of the assumption that the tax rate in Pakistan is too low, but this is based on comparison to Western levels of taxation. For a developing economy Pakistan’s tax rate is roughly in line with the rest of the world, but US officials feel perfectly justified in dictating the tax rates of other nations, and for the current administration this seems to mean and endless call for increases.

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