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Commercial Policy Reform in Pakistan: Opening up the Economy under Revenue Constraints

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  • Sajal Lahiri

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  • Anjum Nasim

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Abstract

We examine the potential for further reform of sales tax and tariffs on final goods and on intermediate inputs in Pakistan. Analysis is conducted at two levels. First, optimal taxes are computed under the assumption that tax revenue is exogenous and pays for a public good, and these are compared with their current levels. Second, we consider two piecemeal reform exercises to examine whether there is further scope for replacing the two tariffs by sales tax in a revenue-neutral way. Both approaches suggest that there is considerable scope for further reducing tariffs on final goods, but not on intermediate inputs. Copyright Springer Science + Business Media, Inc. 2005

Suggested Citation

  • Sajal Lahiri & Anjum Nasim, 2005. "Commercial Policy Reform in Pakistan: Opening up the Economy under Revenue Constraints," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(6), pages 723-739, November.
  • Handle: RePEc:kap:itaxpf:v:12:y:2005:i:6:p:723-739 DOI: 10.1007/s10797-005-0486-8
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    References listed on IDEAS

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    Cited by:

    1. Michael S. Michael & Panos Hatzipanayotou, 2013. "Cooperative and Non-Cooperative Equilibrium Consumption Taxes in the Presence of Cross-Border Pollution," CESifo Working Paper Series 4501, CESifo Group Munich.
    2. Panos Hatzipanayotou & Sajal Lahiri & Michael Michael, 2011. "Trade and domestic tax reforms in the presence of a public good and different neutrality conditions," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(3), pages 273-290, June.
    3. Lahiri, Sajal & Nasim, Anjum, 2006. "Export-promotion under revenue constraints: The case of tariff-rebate on intermediate inputs in Pakistan," Journal of Asian Economics, Elsevier, pages 285-293.
    4. Michael S. Michael & Sajal Lahiri & Panos Hatzipanayotou, 2008. "Integrated Reforms of Indirect Taxes in the Presence of Pollution," CESifo Working Paper Series 2276, CESifo Group Munich.

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    Keywords

    VAT; tariffs; government revenue; Pakistan;

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