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The UK government should withhold extra aid to Pakistan unless it does more to gather taxes from its wealthier citizens, a group of MPs has said.
The International Development Committee said British taxpayers should not be paying for health and education in Pakistan while rich Pakistanis were paying little tax.
They also urged ministers to ensure aid was focused on anti-corruption efforts.
Ministers said they were committed to ensuring tax reform took place.
The government is planning to double the amount of aid it provides to Pakistan from £267m in 2012-13 to £446m in 2014-15, making it the largest recipient of UK aid.
The committee accepted there was a "powerful case" for maintaining bilateral aid to Pakistan, which has "long-established ties" with the UK and "real poverty and serious security problems".
'Pakistani elite'
But the MPs said they could not support the use of British taxpayers' money for aid in Pakistan without ensuring the new Pakistani government, to be elected in May this year, was committed to reforming the tax system.
The report said Pakistan had a lower-than-average tax take, with only 0.57% of Pakistanis - 768,000 individuals - paying income tax last year.
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We cannot expect people in the UK to pay taxes to improve education and health in Pakistan if the Pakistani elite does not pay meaningful amounts of income tax"
Sir Malcolm Bruce Committee chairman
The committee also criticised the Department for International Development (DfID) for failing to put corruption, frequent absences in the rule of law and low tax collection at the top of the agenda for its governance work in Pakistan.
Lib Dem Sir Malcolm Bruce, chairman of the cross-party committee, said: "The committee is concerned that not enough tax is raised in Pakistan to fully finance improvements in the quality of life for poor people.
"In particular, we cannot expect people in the UK to pay taxes to improve education and health in Pakistan if the Pakistani elite does not pay meaningful amounts of income tax."
The MPs recommended that as a "significant friend" of Pakistan the UK should "do all it can" to encourage effective tax collection.
It called on DfID to work with other donor countries and the International Monetary Fund to push for reform of Pakistan's tax system and back a national campaign to build domestic political momentum for change.
The committee also said corruption was "rife" in Pakistan, where society was "based on patronage and kinship networks".
'Not sustainable'
Sir Malcolm added: "It is vital for Pakistan, and its relations with external aid donors, that the new government provides clear evidence that it will own and implement an effective anti-corruption strategy.
"DfID must likewise set measurable targets against which to measure and confirm positive impacts arising from effective investment in anti-corruption measures."
A spokesman for DfID said the report "rightly sets out the urgent need for the incoming Pakistan government to deliver tax reform".
He added: "Reform must start from the top down, with elected politicians and the wealthiest in Pakistan showing a commitment to reform by submitting tax returns and paying tax due.
"The UK government is clear that UK development assistance in Pakistan is predicated on a commitment to economic and tax reform and to helping lift the poorest out of poverty.
"We have made it clear to government and opposition politicians in Pakistan that it is not sustainable for British taxpayers to fund development spend if Pakistan is not building up its own stable tax take.
"Following the election we will make available practical assistance to the incoming government to help deliver reform of the Pakistan tax system and work with the IMF, but tax and economic reform must take place."
BBC News - Stop UK aid to Pakistan unless taxes increase, urge MPs
The International Development Committee said British taxpayers should not be paying for health and education in Pakistan while rich Pakistanis were paying little tax.
They also urged ministers to ensure aid was focused on anti-corruption efforts.
Ministers said they were committed to ensuring tax reform took place.
The government is planning to double the amount of aid it provides to Pakistan from £267m in 2012-13 to £446m in 2014-15, making it the largest recipient of UK aid.
The committee accepted there was a "powerful case" for maintaining bilateral aid to Pakistan, which has "long-established ties" with the UK and "real poverty and serious security problems".
'Pakistani elite'
But the MPs said they could not support the use of British taxpayers' money for aid in Pakistan without ensuring the new Pakistani government, to be elected in May this year, was committed to reforming the tax system.
The report said Pakistan had a lower-than-average tax take, with only 0.57% of Pakistanis - 768,000 individuals - paying income tax last year.
Continue reading the main story
"Start Quote
We cannot expect people in the UK to pay taxes to improve education and health in Pakistan if the Pakistani elite does not pay meaningful amounts of income tax"
Sir Malcolm Bruce Committee chairman
The committee also criticised the Department for International Development (DfID) for failing to put corruption, frequent absences in the rule of law and low tax collection at the top of the agenda for its governance work in Pakistan.
Lib Dem Sir Malcolm Bruce, chairman of the cross-party committee, said: "The committee is concerned that not enough tax is raised in Pakistan to fully finance improvements in the quality of life for poor people.
"In particular, we cannot expect people in the UK to pay taxes to improve education and health in Pakistan if the Pakistani elite does not pay meaningful amounts of income tax."
The MPs recommended that as a "significant friend" of Pakistan the UK should "do all it can" to encourage effective tax collection.
It called on DfID to work with other donor countries and the International Monetary Fund to push for reform of Pakistan's tax system and back a national campaign to build domestic political momentum for change.
The committee also said corruption was "rife" in Pakistan, where society was "based on patronage and kinship networks".
'Not sustainable'
Sir Malcolm added: "It is vital for Pakistan, and its relations with external aid donors, that the new government provides clear evidence that it will own and implement an effective anti-corruption strategy.
"DfID must likewise set measurable targets against which to measure and confirm positive impacts arising from effective investment in anti-corruption measures."
A spokesman for DfID said the report "rightly sets out the urgent need for the incoming Pakistan government to deliver tax reform".
He added: "Reform must start from the top down, with elected politicians and the wealthiest in Pakistan showing a commitment to reform by submitting tax returns and paying tax due.
"The UK government is clear that UK development assistance in Pakistan is predicated on a commitment to economic and tax reform and to helping lift the poorest out of poverty.
"We have made it clear to government and opposition politicians in Pakistan that it is not sustainable for British taxpayers to fund development spend if Pakistan is not building up its own stable tax take.
"Following the election we will make available practical assistance to the incoming government to help deliver reform of the Pakistan tax system and work with the IMF, but tax and economic reform must take place."
BBC News - Stop UK aid to Pakistan unless taxes increase, urge MPs
