The Odd Fascination with Tax-to-GDP Ratio
Nadeem Haque and
Raja Rafi Ullah
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Raja Rafi Ullah: Pakistan Institute of Development Economics
No 2022:78, PIDE Knowledge Brief from Pakistan Institute of Development Economics
There has been persistent pressure on successive Pakistani Governments by policymakers, especially those affiliated with multilateral donor agencies, to increase the Percentage Tax-to-GDP ratio. It is true, that the fiscal deficit continues to increase. However, the assumption that it is a tax shortfall that grows the deficit needs to be challenged. Haque (2020 & 2022) and PIDE (2021) have consistently challenged this hypothesis by noting that growing government expenditures arise from its inability to control inefficiencies, losses, and staffing. In addition, the government creates a large number of new agencies often duplicating work and often without regard to funding and cost benefit considerations.
Pages: 4 pages
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