Reform Issues in Tax Policy and Tax Administration for Self-Reliant Development (Monetary AND FISCAL Issues) (Report‪)‬

Similar to most countries, objectives of the taxation system in Pakistan are not well-defined. Historically, the primary objective has been resource generation for the Government. The taxation system has simultaneously addressed the secondary objectives of promoting area/sector-specific economic activities, discouraging undesired imports/production, encouraging savings and investment. After explaining salient features and structural problems of Taxation System in Pakistan, this paper focuses on key issues in taxation reforms. These issues concern with both tax policy and tax administration. While equity and progressivity of taxation system are important considerations, the analysis presented in this study concludes that resource mobilisation appears to be the most important item on Government agenda. An important tax policy issue concerns broadening of the tax base, particularly for income, wealth and sales tax. Another important tax policy reform issue concerns the delineation of taxing jurisdiction of federal and provincial taxes. The major reform issues concerning tax administration broadly orbit around the inadequate institutional capacity to deal with a modern economy, lack of motivation and accountability. INTRODUCTION