Taxation Commons^™

Fiscal Challenges And Budget Fy25, Asim Bashir Khan

Faculty Research - Book Chapters and Conference Papers

Pakistan economy is facing economic slowdown, inflationary pressures, losses from state-owned enterprises, and circular debt. The tax target for FY25 seems over-ambitiously high at PKR 12.97 trillion (10.45 percent of GDP). The target for non-tax revenue has been set at PKR 4.85 trillion, which is 64 percent higher than the revised estimate of FY24. A debt and deficit driven fiscal equation might not have fiscal viability, but the situation will remain unchanged until a decent tax-to-GDP benefit taxation with fair tax incidence and equitable public spending system is in place.

State Of Trade In Pakistan, Muhammad Zeshan

CBER Conference

We believe that high tariff rates have increased the overall cost of production in Pakistan, and the domestic prices of many products have become much higher than the international market prices. Reducing import tariffs will reduce not only the domestic prices but will also increase the export competitiveness of the country because many imported products are complementary intermediate inputs in various exporting industries.

Fixing The Taxation System - Part Iv, Ishrat Husain Dr.

Faculty Research - Newspaper and Magazine Articles

Among many compelling reasons for further devolution to the third tier is that citizens in a local jurisdiction are found to pay more taxes as they see that these are being used for their access to basic public services. Under a centralized system they consider it disappearing into a black box and they don’t see any perceptible benefits for themselves or the areas they live in. The quantum of revenues can rise significantly if taxes such as agriculture income tax and urban property tax are devolved to local governments. The metropolitan corporations of Karachi, Islamabad, Lahore and many others would …

Fixing The Taxation System - Part Iii, Ishrat Husain Dr.

Faculty Research - Newspaper and Magazine Articles

One of the pernicious side-effects of a large dose of the federal divisible tax pool injected into the provincial finances is that the provinces have become slack in mobilizing their own revenues. The provinces contribute only one per cent of GDP to national taxes. Indian state governments contribute 35 per cent to the total tax revenues or 6-7 per cent of GDP. Provinces in Pakistan together spend 40 per cent of the total consolidated expenditures while raising only 10 per cent of total national tax revenues. When flushed with such windfall liquidity, political will, and bureaucratic effort to tap GST …

Fixing The Taxation System - Part Ii, Ishrat Husain Dr.

Faculty Research - Newspaper and Magazine Articles

Studies on sectoral incidence show that industry bears more than two-thirds of the tax, while the services sector bears about 21 per cent and agriculture 3.0 per cent. In the services sector, transportation and trade together account for one-third of GDP. The wholesale and retail trade sector contributes 18 per cent to GDP but pays only 2.9 per cent in income tax. The potential realizable gap in this sector is 0.5 per cent of GDP. Except for a few companies, the transport subsector is dominated by small- and medium-size operators. Only air and shipping companies yield some revenues. Similarly, out …

Fixing The Taxation System - Part I, Ishrat Husain Dr.

Faculty Research - Newspaper and Magazine Articles

Very few people outside the economics profession realize that fiscal (government revenue and expenditure) and current accounts (inflows and outflows of foreign exchange) are closely interlinked. A current account is an accounting identity which shows the difference between a country’s national savings and domestic investments. China is a current account surplus country because its national savings are higher than its investment needs and is therefore a capital exporting nation that is financing the current account deficit of the US. Pakistan, except for three years – 2003, 2004 and 2005 – has been a current account deficit country. Since significant foreign …

Tariffs, Trade And Taxation, Ishrat Husain Dr.

Faculty Research - Newspaper and Magazine Articles

According to official sources, the recent decline of Pakistani exports is due to adverse global economic conditions. Others attribute this, inter alia, to the appreciation of the Pakistani rupee. Both these factors may be partially true but defy empirical evidence as single-factor explanations. Indian exports have expanded by 62 per cent, Bangladeshi by 69pc and Sri Lankan by 21pc from 2010 to 2015. In clothing exports, Vietnam, Bangladesh and Cambodia recorded growth rates of 10pc, 6pc and 8pc respectively. Bangladesh’s nominal exchange rate has remained unchanged and the real effective exchange rate shows 54pc appreciation since FY2010-11. The rupee appreciation …

Stubborn Taxation Regime, Ishrat Husain Dr.

Faculty Research - Newspaper and Magazine Articles

Successive governments have been confronted with the issue of a stagnant or declining tax revenue stream. Many reforms of the Federal Board of Revenue, tax policy and tax administration have been attempted but the results have been painfully disappointing.

To analyse the reasons for the tax regime’s intractable nature we have to adopt a more systemic approach by dissecting the economy into sectors including rural and urban; formal, informal and illicit; agriculture, industry and services; and income distribution groups.

Of Pakistan’s potential labour force of 75 million, 18 million are not participating, five million are unemployed and 52 million employed. …