Anjum Nasim Khyber Pakhtunkhwa Revenue Mobilization

This policy brief is based on the section written by Anjum Nasim, Institute of Development and Economic Alternatives (IDEAS), in “Reclaiming Prosperity in Khyber Pakhtunkhwa” on fiscal space. Over the last two years, Khyber Pakhtunkhwa’s (KP) provincial finances have improved markedly, mainly due to increased transfers from the federal government. However, large pay and pension raises in the last two fiscal years have consumed significant resources. These expenditures have led to inadequate spending on operations and maintenance, with adverse consequences for asset maintenance. Additional fiscal space is now required to meet the development needs of the province.

Hanid Mukhtar Public Expenditure in Pakistan

This study examines the pattern of public expenditure in Pakistan — including public debt and its management, the morass of subsidies and grants, fiduciary oversight and sectoral priorities — and argues for efficient utilization of public money. Dr. Mukhtar makes the case for significant increase in revenue collection in the context of improved expenditure management and the need to sharply increase public expenditure for meeting development objectives.

Ijaz Nabi and Hina Shaikh Reforming Urban Property Tax in Punjab

The brief highlights that the property tax collected by Punjab is roughly one fifth of the collection by provinces in other comparable countries suggesting that collection can be increased to 25 billion after reforms. UIPT is only one tenth of one percent of the GDP. Various reasons identified for this in the policy paper include; the lack of growth of the property tax base and undervaluation of property base by 45% to avoid being fairly taxed, tax administration needs to be strengthened and new rating areas to be notified. The current tax rate on property, twenty five percent, is considered too high creating incentive for evasion and the differential in tax rate between owner- occupied and rented out properties in Punjab (1:10) is argued to be the most important source of corruption.

International Growth Centre (Edited by Khalid Ahmed) General Sales Tax: sailing ahead but…

The brief sheds light on the fastest growing stream of tax revenue in Pakistan. The need for globalization and accompanying trade liberalization policies has resulted in a stop in custom duties. Thus, the government will have to straighten out the sales tax regime to plug the growing federal collection gap. Sales tax is the single most important source of government revenue and deserves more attention from the senior management of the FBR. The brief highlights that while some companies are taxed negatively the others are taxed highly. Only the top 1000 companies pay 97.4% of all sales tax and federal duty. The brief proposes policy solutions in this regard.

Ijaz Nabi and Naved Hamid Personal and Corporate Income Tax in Pakistan

Garment manufacturing, the least energy and capital-intensive kind of industrial activity, is not realising its potential in Pakistan to grow the economy and create employment. To unlock the benefits of garments manufacturing on Pakistan’s economy, it must move up the value chain and compete in global export markets.

International Growth Centre (Edited by Khalid Ahmed) Taxation Crisis in Pakistan

The brief highlights the need for indirect taxation due to the shortage in income tax payers in the country. This is less than 1 percent of the population of 180 million. The individual income tax from salaried workforce accounts for only 3 percent of all taxes collected by the government. Indirect taxation is considered regressive. Twenty-five percent of all taxes in Pakistan come from just one sector – the energy sector. The problem thus does not lie in high tax burden on those who pay taxes but in the lack of fairness in the sense that too few people pay most of the tax. This happens when rules and regulations allow many people to escape the tax net legally and also illegally through poor enforcement. The brief suggests that it is not the “burdened middle class” but in fact the corporate sector of Pakistan that pays over 62.4 percent of all income tax in Pakistan.


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