Redistributive Impact of GST Tax Reform: Pakistan, 1990-2001

Saadia Refaqat

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)

Abstract

This paper assesses the welfare impact of GST reform on Pakistani households between 1990 and 2001, a period that coincides with major GST reforms that have increased GST contribution to total tax revenue from 15 percent to 42 percent. As well as the tax burden having increased, we find that the distributional incidence has worsened; GST after-reform impact on welfare is proportional as compared to slight progressivity in the before-reform period. Our results, based on distributional characteristics developed by Feldstein (1972) and recently used by Newbery (1995), show that the welfare of the poor households has been reduced due to taxation of items such as sugar, vegetable ghee, and basic fuels, whereas rich households remain comparatively better off because most of the services remain out of GST tax net.
Original languageEnglish
Pages (from-to)841-60
Number of pages20
JournalPakistan Development Review
Volume44
Issue number4
Publication statusPublished - 2005

Keywords

  • Externalities
  • Taxation and Subsidies
  • Environmental Taxes and Subsidies (H230)
  • Fiscal and Monetary Policy in Development (O230)
  • Business Taxes and Subsidies including sales and value-added (VAT) (H250)
  • Redistributive Effects
  • Microeconomic Analyses of Economic Development (O120)

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