World Bank2012-03-192012-03-192009-07-01https://hdl.handle.net/10986/3100The main message of this report is that Pakistan can take measures to increase the tax to gross domestic product (GDP) ratio by around 3.5 percentage points over the next five years. In order to ensure a healthy long-run economic development, Pakistan needs to embrace substantial changes in tax policy aimed at increasing the buoyancy of the tax system, broadening the tax bases, reducing distortions and phasing out exemptions. Such tax reforms are also required to deal with the risks stemming from sustained large budget deficits. Failing to act sooner rather than later, only makes the problem more difficult to address without considerable instability, raises the probability of fiscal and financial disarray at some point in the future, and runs the risks of further constraining policy flexibility in future. This report highlights design ingredients for a comprehensive reform of tax policy in Pakistan. In the final analysis, the success of tax reform will depend less on the mechanism of taxation and more on the politics of taxation. Beyond adequate administrative resources and an implementation strategy, this will require a clear political recognition of the importance of the task and the willingness to persist with tax reform over the long haul.CC BY 3.0 IGOACCOUNTINGBANK HOLDINGSBIDBONDSBUDGET DEFICITBUDGET DEFICITSCAPACITY BUILDINGCAPITAL FLOWSCAPITAL GAINSCAPITAL STOCKCENTRAL TAXESCOMMODITIESCOMMODITYCOMPLIANCE COSTSCONSUMPTION TAXESCORPORATE INCOME TAXCORPORATE PROFIT TAXCORPORATE TAXCORPORATE TAX RATECORPORATE TAX RATESCREDIT MARKETSCURRENT ACCOUNT DEFICITDEBTDEDUCTIONSDEVELOPING COUNTRIESDIVIDENDSDOUBLE TAXATIONDOUBLE TAXATION TREATIESECONOMIC CRISISECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC POLICIESECONOMIC REFORMSEFFECTIVE TAX RATESELECTRICITYEMERGING ECONOMIESEMERGING MARKETEMERGING MARKET ECONOMIESENFORCEMENT MECHANISMSEQUIPMENTEXCHANGE RATEEXCISE TAXEXCISE TAXESEXPENDITUREEXPENDITURE RESPONSIBILITIESEXPORTEXPORT SECTORSEXPORTSEXTERNALITIESFEDERAL TAXFINANCIAL MARKETSFINANCIAL SERVICESFINANCIAL TRANSACTIONSFISCAL BALANCEFISCAL CONSOLIDATIONFISCAL DEFICITFISCAL DEFICITSFISCAL IMBALANCEFISCAL POLICYFISCAL RESPONSIBILITYFLAT RATE INCOME TAXFLAT RATE INCOME TAXESFLAT TAXFOREIGN CAPITALFOREIGN INFLOWSFRAUDGLOBAL DEPOSITORYGOVERNMENT BORROWINGGOVERNMENT EXPENDITURESGOVERNMENT REVENUESGOVERNMENT SPENDINGHOUSEHOLD WEALTHHUMAN DEVELOPMENTIMMOVABLE PROPERTYIMMUNIZATIONINCOME DISTRIBUTIONINCOME LEVELINCOME LEVELSINCOME TAX REFORMINCOME TAX REFORMSINCOMESINDEBTEDNESSINFLATIONINFORMAL ECONOMYINFRASTRUCTURE PROJECTSINTEREST PAYMENTSINTEREST RATESINTERNAL SAVINGSINTERNATIONAL DEVELOPMENTINTERNATIONAL STANDARDSINVESTINGINVESTMENT CLIMATEINVESTMENT DECISIONSLEGAL FRAMEWORKLEVIESLEVYLIVING STANDARDSLOSS OF CONFIDENCEMACROECONOMIC STABILITYMACROECONOMIC VULNERABILITIESMARGINAL TAX RATESMARKET EXPECTATIONSMARKET FAILURESMONETARY FUNDMONOPOLYMORTGAGEMORTGAGE INTERESTNATIONAL BANKNATIONAL FINANCEOUTPUTOUTPUTSPERSONAL INCOMEPERSONAL INCOME TAXESPOLITICAL SYSTEMPOLITICAL UNCERTAINTYPRIVATE BORROWERSPRIVATE INVESTMENTPRIVATE INVESTMENTSPRIVATE SECTORPRIVATIZATIONPROPERTY TAXPROPERTY TAX REFORMPROVINCIAL GOVERNMENTSPROVINCIAL SALES TAXPUBLICPUBLIC ASSETSPUBLIC DEBTPUBLIC EXPENDITURESPUBLIC INFRASTRUCTUREPUBLIC INVESTMENTPUBLIC POLICYPUBLIC PROPERTYPUBLIC RESOURCESPUBLIC SECTORPUBLIC SPENDINGRAPID GROWTHREAL ECONOMIC ACTIVITYREFORM PROGRAMREVENUE COLLECTIONREVENUE SHARINGSAFETY NETSALES TAXSALES TAXESSHAREHOLDERSHAREHOLDER EQUITYSHORT-TERM CAPITALSMALL BUSINESSESSOCIAL SAFETY NETSOCIAL SECURITY TAXESSTATE BANKSTATUTORY TAXSTATUTORY TAX RATESTATUTORY TAX RATESSTOCK MARKETSTOCK PRICESSTRUCTURAL PROBLEMSSUSTAINABLE GROWTHTAXTAX ADMINISTRATIONTAX BASETAX BASESTAX CODETAX COLLECTIONTAX COLLECTIONSTAX COMPLIANCETAX CREDITSTAX ENFORCEMENTTAX EVASIONTAX EXEMPTIONSTAX EXPENDITURESTAX INCENTIVESTAX INCIDENCETAX LAWSTAX LEGISLATIONTAX LIABILITIESTAX OBLIGATIONTAX POLICIESTAX POLICYTAX PROVISIONSTAX RATETAX RECEIPTSTAX REFORMTAX REFORMSTAX REGIMETAX REGIMESTAX REGULATIONSTAX RETURNTAX RETURNSTAX REVENUETAX REVENUESTAX STRUCTURETAX STRUCTURESTAX SYSTEMTAX SYSTEMSTAXABLE INCOMETAXATIONTAXPAYERTAXPAYER COMPLIANCETAXPAYER SERVICESTAXPAYERSTRADE BALANCETRANSFER TAXESTRANSPARENCYTURNOVERWEAK ENFORCEMENTWITHHOLDING TAXWITHHOLDING TAXESWorld Bank10.1596/3100