Preview

Micromanagement: Vat vs Gst in Pakistan

Powerful Essays
Open Document
Open Document
3253 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
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
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Better Essays

    Unit 38 M2 D2
    • 1547 Words
    • 4 Pages

    Unit 38 M2 D2

    The role of the fiscal policy is to monitor the economy and shows the effects of adjusting income tax. The fiscal policy also can redistribute income by progressive tax which is the percentage of tax which is charged due to a person income. This allows mare tax on people with higher incomes to increase tax revenues. The fiscal policy shows that a rise in income tax would lower personal disposal income and profits for sole traders and partnerships, which will cause less spending, less profits for businesses, less investment, fall in aggregate demand and a shrink in the economy. Therefore to get economic growth, the government should decrease income tax which would have a positive effect on personal disposal income, businesses profits, investment and the economy.…

    • 1547 Words
    • 4 Pages
    Better Essays
    Read More
  • Better Essays

    Bangladesh Government Budget Deficit
    • 1365 Words
    • 6 Pages

    Bangladesh Government Budget Deficit

    Fiscal Policy generally refers to the use of taxation and government expenditure to regulate the aggregate level of economic activity in a country. Fiscal policy in Bangladesh basically comprises activities, which the country carries out to obtain and use resources to provide services while ensuring optimum efficiency of the economic units. The policy influences the behaviour of economic forces through public finance. Major objectives of the fiscal policy of Bangladesh are to ensure macroeconomic stability of the country, promote economic growth, and develop a mechanism for equitable distribution of income. The main tools to achieve these objectives are variation in public revenue, variation in public expenditure, and management of public debt. These are reflected in the budgetary operations of the government, prepared and implemented on year-on-year basis.…

    • 1365 Words
    • 6 Pages
    Better Essays
    Read More
  • Powerful Essays

    Wait Unemployment
    • 7034 Words
    • 29 Pages

    Wait Unemployment

    Pakistan Institute of Development Economics Islamabad, Pakistan E-mail: publications@pide.org.pk Website: http://www.pide.org.pk Fax: +92-51-9210886 Designed, composed, and finished at the Publications Division, PIDE.…

    • 7034 Words
    • 29 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    GST Boon or Bane For Malaysian Economy
    • 441 Words
    • 2 Pages

    GST Boon or Bane For Malaysian Economy

    It’s been a whirlwind year of Malaysian price and tax increases. Right at the centre is the controversial Goods and Services Tax at a flat 6%, revealed in the 2014 Budget announcement by Prime Minister Datuk Seri Najib Razak. We look at the facts of the GST and how it will impact the economy.…

    • 441 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    Tax Structure in India
    • 2950 Words
    • 12 Pages

    Tax Structure in India

    The Tax Structure in India is quite strong and follows the financial year. The taxation under the tax structure in India is applicable for any kind of income pertaining to a person working as an employee under the public sector units, private sector units, foreign companies in India, Departments of the State Governments of India, and Departments of the Central Government of India or self-employed individuals engaged in commercial activities which is legal in nature. The several corporations engaged in commercial activities also come under the taxation. The public bodies, state governments and central government have clear demarcation of their functioning. The central government imposes tax on all kinds of income such as central excise, customs duties, and service tax apart from income pertaining to agriculture. The State Governments of India is responsible for imposing tax pertaining to Value Added Tax (VAT), sales tax, income from agriculture, state excise duty, stamp duty, professional tax, land revenue, etc. Taxes imposed by the local bodies are pertaining to octroi tax, water supply utilities, drainage and sewage utilities, property tax, etc. In last 10-15 years, Indian taxation system has undergone tremendous reforms. The tax rates have been rationalized and tax laws have been simplified resulting in better compliance, ease of tax payment and better enforcement. The process of rationalization of tax administration is ongoing in India. Since April 01, 2005, most of the State Governments in India have replaced sales tax with VAT.…

    • 2950 Words
    • 12 Pages
    Powerful Essays
    Read More
  • Best Essays

    Gst: the Challenges Amd so on for Implementation of Gst
    • 4697 Words
    • 19 Pages

    Gst: the Challenges Amd so on for Implementation of Gst

    In taxation, taxpayers are taxed in two forms: whether through direct taxes such as income tax and road tax or through indirect taxes such as the sales tax and the services tax. For direct taxes, taxpayers will definitely realize that they are facing the tax burden since taxpayers are required to declare their income and to pay tax accordingly to the government. However, for indirect taxes, taxpayers usually don’t realize that they are being taxed since the amount of tax is already accounted for with the selling price. Goods and services tax (GST) is one type of indirect taxes. GST is also known as value added tax (VAT) (Behan & Jenkins, 2005). Although GST and VAT have different names, they represent the same system where the cost of tax is actually borne by the end user. However, each step in the supply chain will collect the tax and will be remitted to the government. The supply chain can also claim back the GST included in the products they buy. According to Singh (2007), it is well documented that a GST can be an effective form of indirect tax. Currently, many countries such as the United Kingdom, New Zealand, Australia and Singapore have already implemented the GST. The VAT has been adopted as part of a package of trade liberalization, compensating for the revenue loss from the reduction of tariffs whilst preserving the gains in production efficiency from moving producer prices closer to world prices. At a more general level—and especially in developing countries—adoption of the VAT is often seen as the central element in a program of modernizing tax administration, developing the use of methods of self-assessment whose generalization is expected ultimately to ease administration and compliance in relation to other taxes too (Keen & Lockwood, 2007). However, there are many issues and questions raised on…

    • 4697 Words
    • 19 Pages
    Best Essays
    Read More
  • Powerful Essays

    Public Finance in the Philippines a Review of the Literature
    • 17823 Words
    • 72 Pages

    Public Finance in the Philippines a Review of the Literature

    It is the objective of this paper to take the initial step in bridging the gap between public finance and policy making in the Philippines by reviewing the existing literature on this subject. For purposes of the paper the field of public finance was divided into four areas: (1) taxation, (2) government expenditures, (3) the budget process and (4) public debt. A historical perspective of each of these sub-topics is presented. In addition, the various research and policy issues related to each of the said sub-topics are discussed and synthesized. Among others, these issues include: (1) the tax effort, (2) allocative effects of taxation, (3) taxation and inflation, (4) fiscal incidence, (5) the budget process and economic development and (6) the optimal level of debt.…

    • 17823 Words
    • 72 Pages
    Powerful Essays
    Read More
  • Good Essays

    Basic Vat Techniques
    • 2101 Words
    • 9 Pages

    Basic Vat Techniques

    When the VAT was initially introduced, there were concerns that it could not replace the GST as a source of government revenue. In addition, a VAT may affect producers’ input choices. When the VAT is administered with rebates for intermediate inputs, there is, in effect, a subsidy for intermediate input use. Producers may substitute intermediates for primary factors (land, labor and capital), affecting the return to factors and income distribution. Another concern is that the VAT, because it is an indirect tax that works through the price system, puts a larger burden of the tax on low-income households.…

    • 2101 Words
    • 9 Pages
    Good Essays
    Read More
  • Good Essays

    GST in Malaysia
    • 370 Words
    • 2 Pages

    GST in Malaysia

    Goods and Services Tax (GST) and Value-Added Tax (VAT) are a type of consumption tax had been invented in 1950’s. Both of GST and VAT are based on value added concept and it is a multi-stage tax, so GST or VAT will charge at each stage of supplies chain. Currently, there are 160 countries had implemented GST or VAT and from this statistic has shown that GST and VAT are an effective and fair tax system.…

    • 370 Words
    • 2 Pages
    Good Essays
    Read More
  • Powerful Essays

    Study on Indian Government Debts and Deficits and Its Effect on the Growth Sustainability
    • 4361 Words
    • 18 Pages

    Study on Indian Government Debts and Deficits and Its Effect on the Growth Sustainability

    Emerging nation India has high hopes of becoming a developed nation. In recent time Indian economy is considered as the fastest growing economy hence there are certain drawbacks such as the government deficits, debts which hinder India from achieving their goal. Development of nation is based on several factors and its more important for every nation to encourage changes, although metamorphic changes have been brought about in the Indian economy every now and then which has seen India emerging as one of the fastest growing countries in the world but on the other hand one of the most embarrassing disappointment during the reform period has been India’s inability to hold the fiscal deficit. Indian government deficits and public debt have remained high regardless of rapid economic growth in recent years and irregular attempts to inspire greater fiscal discipline. This paper describe possible reason for these government and other debts, further paper also focus on how these debt- deficit are major problem in India’s growth.…

    • 4361 Words
    • 18 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    First Discussion Paper on Goods and Services Tax in India
    • 11693 Words
    • 47 Pages

    First Discussion Paper on Goods and Services Tax in India

    Pages Foreword Introduction Preparation for GST Goods & Services Tax Model for India Annexure on Frequently Asked Questions and Answers on GST i-iv 1-11 11-13 13-27 29-53…

    • 11693 Words
    • 47 Pages
    Powerful Essays
    Read More
  • Good Essays

    Impact of Value-Added Taxation on Indian Economic System
    • 690 Words
    • 3 Pages

    Impact of Value-Added Taxation on Indian Economic System

    A tax is “a backbone of every country to meet their social obligations”. Value Added Tax (VAT) is a general consumption tax assessed on the value added to goods and services. It is a general tax that applies, in principle, to all commercial activities involving the production and distribution of goods and the provision of services. India has a well-developed tax structure with clearly demarcated authority between Central and State Governments and local bodies. In one of the large-scale reforms of the country's India has finally agreed the launch of its much-delayed Value Added Tax (VAT) from 1st April 2005. At a rate of 12.5%, VAT will come in on April 1, 2005. The tax, agreed after state finance ministers met in New Delhi, is designed to make accounting more transparent, cut trade barriers and boost tax revenues.…

    • 690 Words
    • 3 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    assocham economic weekly sept 2013
    • 2912 Words
    • 12 Pages

    assocham economic weekly sept 2013

    Quarterly GDP at factor cost at constant (2004-05) prices for Q1 of 2013-14 is estimated at Rs.…

    • 2912 Words
    • 12 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    Gst in India
    • 4199 Words
    • 17 Pages

    Gst in India

    Over the years, tax policy in the country has evolved in response to the development strategy and its changes. In the initial years, the tax policy was directed to increase the level of savings, transfer available savings for investment as envisaged by plan strategy and the need to ensure a fair distribution of incomes, to correct inequalities arising from the oligopolistic market structure created by the co-existence of private and public sector and the existence of other instruments of planning such as licensing system, exchange control, administered price determination. Introduction of the Value Added Tax (VAT) at the Central and the State level has been considered to be a major step – an important breakthrough – in the sphere of indirect tax reforms in India. If the VAT is a major improvement over the preexisting Central excise duty at the national level and the sales tax system at the State level, then the Goods and Services Tax (GST) will indeed be a further significant improvement – the next logical step – towards a comprehensive indirect tax reforms in the country (The Empowered Committee of State Finance Ministers, 2009). II. HISTORY OF TAX REFORMS IN INDIA The history of taxation dates back to time immemorial and it is not a recent development by any account. A thorough research on the history of taxation system shows that taxes were levied on either on the sale and purchase of merchandise or livestock. Further, the history of taxation suggests that the process of levying and the manner of tax collection were unorganized. But it suggests that all historical leaders and head countrymen collected taxes to run its authority. In other words taxes on income, sale, purchase and properties were collected to run the ruling Government machineries. Further, these taxes were collected to meet their…

    • 4199 Words
    • 17 Pages
    Powerful Essays
    Read More
  • Good Essays

    Is foreign aid is blessing or curse?
    • 878 Words
    • 4 Pages

    Is foreign aid is blessing or curse?

    Since the time of independence Pakistan has been facing macroeconomic exertions, such as vicious circle of poverty, less utilization of available natural resources, unfavorable political circumstances that influenced domestic economy and so on. To seize the deficiency, Pakistan has had to depend greatly on financial assistance made by distant countries.…

    • 878 Words
    • 4 Pages
    Good Essays
    Read More

Related Topics