Towards a Fair and Just Fiscal Policy in Pakistan

Overview

Pakistan does not currently mobilize sufficient tax revenue to finance essential public services, including healthcare and education, on which the poor rely the most. Consequently, these services remain inadequate, hampering efforts to reduce poverty and address extreme inequalities.

Furthermore, the current tax system in Pakistan is seen by many as unfair and inequitable. Two-thirds of tax revenue is mobilized through indirect taxes, which are regressive in nature and unfairly burden those least able to pay them.

Against this backdrop, this paper explains the four basic elements necessary for a fair and just tax regime, which, if implemented, would strengthen the domestic revenue base, increase equity and improve overall development outcomes, as the public sector will have more resources at its disposal to spend on human and social well-being.