Supplementary memorandum from the Foreign
and Commonwealth Office
The Foreign Secretary promised to write in response
to two questions posed at the 11 January joint evidence session
on Iraq with the Foreign Affairs & Defence Select Committees.
Dai Havard MP asked whether any of the additional
US$1.2 billion which President Bush announced he would seek from
Congress for reconstruction would be available for use in Southern
Iraq. The US Administration will put this bid for extra funds
for 2007 to Congress this month. If these additional funds are
granted, the Administration's intention is that they should be
spent throughout the whole network of Provincial Reconstruction
Teams (PRTs) in Iraq, including through the UK-led PRT in Basra.
As was noted at the session on 11 January, our
work in Southern Iraq has already benefited from substantial US
funding. This has come from a variety of sources, both military
(through the Commanders Emergency Response Programmes funds, and
the work of the US Army Corps of Engineers); and civilian (through
the money already made available to each of the PRTs through the
National Co-ordination Team in Baghdad, and the work done directly
in the province by USAID). These sources of funding continue.
Gisela Stuart MP asked about the establishment
of a functioning taxation system in Iraq. There is a tax system
in place in Iraq. In common with other economies dominated by
the hydrocarbons sector, the overwhelming bulk of total Government
revenue—some 95%—comes from oil and gas revenues.
Other tax and customs revenue make up the remaining 5%.
The Iraqi Government has been working to diversify
the source of its revenue, in line with its commitment under the
IMF Stand-by Agreement—which calls for broadening of the
tax base and improvement of tax revenue collection and administration.
They have worked with the consultancy group Bearing Point, funded
by the US Government, to create a plan to overhaul to the Iraqi
tax system over the next three to five years.
7 February 2007
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