Assessing Enterprise Taxation and the Investment Climate in Pakistan

James Alm () and Mir Ahmad Khan

International Center for Public Policy Working Paper Series, at AYSPS, GSU from International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University

Abstract: The Pakistan system of taxing enterprises has undergone some major changes in recent years. Nevertheless, the corporate tax system remains plagued by a number of problems. The existence of numerous exemption programs has significantly reduced tax revenues, and has greatly distorted the allocation of investment across sectors and asset types. There also seems to exist significant amounts of tax evasion, evasion that also distorts resource allocation, reduces tax revenues, and compromises the distributional objectives of the system. In part as a result of tax avoidance and tax evasion, the tax base has shrunk over time, further reducing revenues and leaving the more visible taxpayers still out of the tax net. The extensive use of tax incentives is seldom tracked, quantified, and evaluated, and the intended effects on economic growth are uncertain. The incentives are only one feature of the tax system that contributes to an overly complicated system, complications that illustrate the limitations of the tax administration. The tax system was designed for times and circumstances that are long past, and the system has evolved over time in a piecemeal, ad hoc manner with little apparent thought given to the ways in which the pieces of the system need to fit together.

Keywords: Pakistan; Pakistan Taxation; Pakistan system of taxing enterprises; tax avoidance; tax evasion (search for similar items in EconPapers)
Pages: 118 pages
Date: 2008-12-01
New Economics Papers: this item is included in nep-acc, nep-cwa, nep-dev and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:ays:ispwps:paper0810

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