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The distributional consequences of a tax reform on a VAT for Pakistan

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  • Ahmad, Ehtisham
  • Ludlow, Stephen

Abstract

To what extent do rich or poor lose or gain from different tax reform packages ? The authors compare the consequences of different options by analyzing actual patterns of consumption and production. Pakistan, which relies on a narrow tax base has difficulty ensuring that the tax system keeps pace with the growth in national income and activity, without frequent discretionary changes. These changes increase the distortions caused by cascading, with adverse effects on both exports and poor households. The authors'method of estimating the consequences of tax reform shows, for example, that a value added tax would make Pakistan's tax system more buoyant and reduce the production distortions.

Suggested Citation

  • Ahmad, Ehtisham & Ludlow, Stephen, 1989. "The distributional consequences of a tax reform on a VAT for Pakistan," Policy Research Working Paper Series 238, The World Bank.
    • Handle: RePEc:wbk:wbrwps:238
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    References listed on IDEAS

    as
    1. Bird, Richard M., 1987. "A new look at indirect taxation in developing countries," World Development, Elsevier, vol. 15(9), pages 1151-1161, September.
    2. Ahmad, Ehtisham & Stern, Nicholas, 1984. "The theory of reform and indian indirect taxes," Journal of Public Economics, Elsevier, vol. 25(3), pages 259-298, December.
    3. Angus S. Deaton, 1979. "Optimal Taxes and the Structure of Preferences," Working Papers 506, Princeton University, Department of Economics, Industrial Relations Section..
    4. Ahmad, Ehtisham & Stern, Nicholas, 1990. "Tax Reform and Shadow Prices for Pakistan," Oxford Economic Papers, Oxford University Press, vol. 42(1), pages 135-159, January.
    5. Dreze, Jean & Stern, Nicholas, 1987. "The theory of cost-benefit analysis," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 2, chapter 14, pages 909-989, Elsevier.
    6. Deaton, Angus, 1981. "Optimal Taxes and the Structure of Preferences," Econometrica, Econometric Society, vol. 49(5), pages 1245-1260, September.
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    Cited by:

    1. Miss Saadia Refaqat, 2003. "Social Incidence of the General Sales Tax in Pakistan," IMF Working Papers 2003/216, International Monetary Fund.
    2. 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.
    3. Levin, Jörgen & Sayeed, Yeasmin, 2014. "Welfare impact of broadening VAT by exempting local food markets: The case of Bangladesh," Working Papers 2014:7, Örebro University, School of Business.
    4. Shah, Anwar & Whalley, John, 1990. "An alternative view of tax incidence analysis for developing countries," Policy Research Working Paper Series 462, The World Bank.
    5. World Bank, 2014. "Restructuring Corporate Income Tax and Value Added Tax in Vietnam : An Analysis of Current Changes and Agenda for the Future," World Bank Publications - Reports 17832, The World Bank Group.

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