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Incidence of general sales tax in Pakistan : Latest estimate

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  • Haroon Jamal*
  • Sohail Javed**

Abstract

The study provides estimates of overall incidence, as well as, the distribution and burden of General Sales Tax across household welfare levels by applying the latest available household consumption data. The analysis is carried out at national, regional and provincial levels; separately for food, non-durable and durable expenditure items. Effective GST rate across deciles of per capita expenditure and Kakwani Summary Index of tax progressivity are estimated for the year 2010-11. Results in general, indicate proportionality of GST incidence associated with some progressivity at the upper part of income distribution. The relative intensity in terms of magnitudes of Kakwani Index indicates regressivity in GST on food and progressivity on durable expenditure items. A simulation exercise is also carried out to observe the impact of non-uniform GST rates for expenditure commodity groups on distribution of the tax burden.

Suggested Citation

  • Haroon Jamal* & Sohail Javed**, 2013. "Incidence of general sales tax in Pakistan : Latest estimate," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 23(2), pages 73-95.
    • Handle: RePEc:pje:journl:article13wini
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    References listed on IDEAS

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    1. Nasim Shah Shirazi & Muhammad Ilyas & Mehboob Ahmad, 2001. "Redistributive Effects of Fiscal Policy across the Income Groups in the Urban-Rural Areas of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 40(4), pages 519-533.
    2. Miss Saadia Refaqat, 2003. "Social Incidence of the General Sales Tax in Pakistan," IMF Working Papers 2003/216, International Monetary Fund.
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    5. Shahnaz Kazi, 1984. "Intersectoral Tax Burdens in Pakistan.A Critical Review of Existing Evidence and Some New Estimates," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 23(4), pages 553-572.
    6. Umir Wahid & Sally Wallace, 2008. "Incidence of Taxes in Pakistan: Primer and Estimates," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0813, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
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    1. Iffat Ara & Qazi Masood Ahmed, 2022. "Differential Impact of Taxation on Food Items," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 27(1), pages 1-19, Jan-June.
    2. Faiz Ur Rehman & Muhammad Nasir, 2018. "In the Same Boat, but not Equals: The Heterogeneous Effects of Indirect Taxation on Child Health in Punjab-Pakistan," PIDE-Working Papers 2018:158, Pakistan Institute of Development Economics.
    3. Iffat Ara, 2023. "Estimating the Distributional Burden of General Sales Tax in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 62(3), pages 395-408.
    4. Rehman Faiz Ur & Nasir Muhammad, 2020. "In the Same Boat, but not Equals: The Heterogeneous Effects of Indirect Taxation on Child Health in Punjab-Pakistan," Asian Journal of Law and Economics, De Gruyter, vol. 11(3), pages 1-26, December.

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