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Micromanagement: Vat vs Gst in Pakistan

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Micromanagement: Vat vs Gst in Pakistan
Table of Contents
Introduction:.................................................................................................................................................. 1 The economy of Pakistan - Moving towards VAT: ...................................................................................... 2 GST & VAT:................................................................................................................................................. 2 Why GST has not been successful in Pakistan and why will VAT be successful: ................................... 2 Advantages of VAT: ................................................................................................................................. 3 The role of IMF in the economy of Pakistan: ............................................................................................... 4 Equity and Justice or demands of foreign lenders: ....................................................................................... 5 Conclusion: ................................................................................................................................................... 7 References ..................................................................................................................................................... 8 Exhibits ......................................................................................................................................................... 9

Introduction: Pakistan has long been striving hard to achieve macroeconomic stability. However, its low tax-GDP ratio along with high expenditures and subsidies has hindered Pakistan in achieving that. The tax-GDP ratio has long been swinging around 10-11% (Exhibit 1). Moreover, debt servicing and high expenditure to curb terrorism have worsened the situation. Taxes are major instrument of fiscal policy through which country’s output and employment is changed to bring it closer


References: Zaman, Nadeem et al. (2012), The implications the value added tax in Pakistan: administration, experiences and fears Saira Yousuf (2009), IMF Loans to Pakistan: History and Current prospects Aisha Ghaus Pasha, (2010), Can Pakistan Get Out of the Low Tax-to-GDP Trap? Meekal Aziz (2012), The IMF and Pakistan Shahzad Ali (2010), Is VAT implementation viable in Pakistan? Qamar-uz-Zaman, (2012), Value Added Tax – Theoretical Aspects and Empirical Evidence for Pakistan Dr Ehtisham Ahmad (2011), Why is it so difficult to implement a GST in Pakistan? Saeed Ahmed and Saeed Ahmed Sheikh, (2011), Tax Reforms in Pakistan (1990-2010), International Journal of Business and Social Science Mr. Shahid Ahmed, Implementation of VAT: Pakistan 's Experience Pakistan Economic Survey 2011-2012, Highlights FBR (March 2012), FBR Quarterly Review Muhammad Aamir (2011), Determinants of Tax Revenue: A Comparative Study of Direct taxes and Indirect taxes of Pakistan and India 8|Page Exhibits Exhibit 1: Tax-GDP ratio Exhibit 2: Gini coefficient 9|Page Exhibit 3: Tax Revenue vs. Non-Tax Revenue Exhibit 4: 10 | P a g e Exhibit 5: 11 | P a g e
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