Reform Issues in Tax Policy and Tax Administration for Self-reliant Development

Ahmad Khan


Similar to most countries, objectives of the taxation system
in Pakistan are not well-defined. The stated objectives include resource
generation, promoting arealsectorspecific economic activities,
discouraging undesired imports/production, and encouraging savings and
investment. These objectives have been met through a variety of tax
concessions and exemptions, rebates and credits, and differentiated tax
rates and tariffs. The revenue short falls/leakages resulting from
preferential tax treatment of the desired activities were offset through
appropriate changes in various fiscal instruments, e.g. high tax rates
and tariffs, regulatory duties, extended withholding and presumptive
taxes, excise duties on services, and many more. These measures, in
turn, have complicated the taxation system and adversely affected the
equity, neutrality and progressivity thereof.

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