Tax Reform for Pakistan: Overview and Effective Taxes for 1975-76

Ehtisham Ahmad, Nicholas Stern


This paper evaluates consequences of taxation policy changes
in• terms of effects on government revenue, households and production.
It concentrates on derivation and analysis of effective taxes. The
revised economy-wide input-output table prepared at the Pakistan
Institute of Development Economics has been used to estimate effective
taxes and shadow prices. The paper finds that in Pakistan as in other
developing countries effective tax rates diverge substantially from
nominal tax rates - a fact whose awareness can greatly help the
policy-makers in avoiding unintended consequences of government

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