Redistributive effect of personal income taxation in Pakistan
AbstractThis paper studies the redistribution effect of personal income tax in Pakistan. We decompose the overall tax system in order to evaluate the contribution of rate, allowances, deductions, exemptions and credits. The structure given in Income Tax Ordinance, 2001, is applied to gross household incomes in 2002 (low growth year) and 2005 (high growth year). Our findings reveal that the reforms laid down in this Ordinance resulted in a greater redistribution of incomes. The redistributive effect increases as we move from 2002 to 2005 tax assessment. Deductions for salaried tax payers contribute the most towards progressivity. This is different from countries with advanced taxation systems relying mainly on allowances followed by tax rate and exemptions.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 16700.
Date of creation: 03 Jul 2009
Date of revision:
Publication status: Published in Pakistan Economic and Social Review 1.47(2009): pp. 1-17
Income Taxation; Microsimulation; Redistribution; Inequality;
Other versions of this item:
- Vaqar Ahmed & Cathal O'Donoghue, 2009. "Redistributive Effect of Personal Income Taxation in Pakistan," Working Papers 0143, National University of Ireland Galway, Department of Economics, revised 2009.
- D3 - Microeconomics - - Distribution
- D6 - Microeconomics - - Welfare Economics
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-08-16 (All new papers)
- NEP-CMP-2009-08-16 (Computational Economics)
- NEP-CWA-2009-08-16 (Central & Western Asia)
- NEP-PBE-2009-08-16 (Public Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Immervoll, Herwig & O'Donoghue, Cathal, 2001.
"Imputation of gross amounts from net incomes in household surveys: an application using EUROMOD,"
EUROMOD Working Papers
EM1/01, EUROMOD at the Institute for Social and Economic Research.
- Herwig Immervoll & Cathal O'Donoghue, 2003. "Imputation of Gross Amounts from Net Incomes in Household Surveys. An Application using EUROMOD," Computational Economics 0302001, EconWPA.
- Muhammad Hussain Malik & Najam Us Saqib, 1989. "Tax Incidence by Income Classes in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 28(1), pages 13-26.
- Cathal O'Donoghue, 2001. "Dynamic Microsimulation: A Methodological Survey," Brazilian Electronic Journal of Economics, Department of Economics, Universidade Federal de Pernambuco, vol. 4(2), December.
- Richard Bird & Eric Zolt, 2007.
"Tax Policy in Emerging Countries,"
International Tax Program Papers
0707, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto.
- Sicat, Gerardo P & Virmani, Arvind, 1988. "Personal Income Taxes in Developing Countries," World Bank Economic Review, World Bank Group, vol. 2(1), pages 123-38, January.
- Bird, Richard M., 2008.
"Tax challenges facing developing countries,"
08/als1, National Institute of Public Finance and Policy.
- Richard Bird, 2008. "Tax Challenges Facing Developing Countries," Working Papers Series 12, Rotman Institute for International Business, Joseph L. Rotman School of Management, University of Toronto, revised Mar 2008.
- Richard Bird, 2008. "Tax Challenges Facing Developing Countries," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0802, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
- Richard M. Bird, 2008. "Tax Challenges Facing Developing Countries," Working Papers id:1618, eSocialSciences.
- N. Anders Klevmarken, 1997.
"Behavioral Modeling in Micro Simulation Models. A Survey,"
Working Paper Series
1997:31, Uppsala University, Department of Economics.
- Klevmarken, N.A., 1997. "Behavioral Modeling in Micro Simulation Models. A Survey," Papers 1997-31, Uppsala - Working Paper Series.
- Pfahler, Wilhelm, 1990. "Redistributive Effect of Income Taxation: Decomposing Tax Base and Tax Rates Effects," Bulletin of Economic Research, Wiley Blackwell, vol. 42(2), pages 121-29, April.
- Adam Wagstaff & Eddy van Doorslaer, 2001. "What Makes the Personal Income Tax Progressive? A Comparative Analysis for Fifteen OECD Countries," International Tax and Public Finance, Springer, vol. 8(3), pages 299-316, May.
- Bernardi, Luigi & Fraschini, Angela, 2005. "Tax system and tax reforms in India," POLIS Working Papers 45, Institute of Public Policy and Public Choice - POLIS.
- Bird, Richard M. & Zolt, Eric M., 2005. "The limited role of the personal income tax in developing countries," Journal of Asian Economics, Elsevier, vol. 16(6), pages 928-946, December.
- Bernardi, Luigi & Gandullia, Luca & Fumagalli, Laura, 2005. "Tax Systems and Tax Reforms in South and East Asia: Overview of Tax Systems and main policy issues," MPRA Paper 1869, University Library of Munich, Germany.
- Gerhard Wagenhals, 2004. "Tax-benefit microsimulation models for Germany: A Survey," Diskussionspapiere aus dem Institut fÃ¼r Volkswirtschaftslehre der UniversitÃ¤t Hohenheim 235/2004, Department of Economics, University of Hohenheim, Germany.
- Verbist, Gerlinde, 2004. "Redistributive effect and progressivity of taxes: an international comparison across the EU using EUROMOD," EUROMOD Working Papers EM5/04, EUROMOD at the Institute for Social and Economic Research.
- Ahmed, Vaqar & Wahab, Mohammad Abdul, 2011. "Foreign assistance and economic growth: evidence from Pakistan 1972 - 2010," MPRA Paper 30344, University Library of Munich, Germany.
- Haque, Nadeem & Ahmed, Vaqar & Shahid, Sana, 2011. "Reforms for competitive markets in Pakistan," MPRA Paper 33990, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.