Country Rankings - Pakistan
Feb 08, 2016 Pakistan: shamnestyLast week I made the observation that tax credits have become the "go to" tax measure when governments want to achieve certain economic policy objectives. However, running along the rail in a close second place must be tax amnesties. Although, of course, these can only really achieve one thing: a quick revenue fix for governments. However, it is now widely acknowledged in the academic community that tax amnesties are bad policy because they tend to undermine rates of tax compliance over the long-term. Also, they can be expensive to set up and administer, costs which eat into any new revenue yield. Yet, it seems that barely a week goes by without one tax authority or another announcing the launch of a new tax amnesty, or the results of an existing one. So why do governments persist with them? The only answer I can give to that question is "needs must." Tax amnesty schemes, if designed with just the right balance of carrot and stick, are an easy source of revenue. And given that the horizon of most democratically elected governments is a short-term one anyway – i.e. the next election – then it's easier to understand why amnesties are used, perhaps over-used. But who to execrate? I think it has to be Pakistan, which has just announced its latest in a long line of tax amnesties. It's little wonder hardly anyone in Pakistan appears to pay tax, when they almost have an incentive not to. Thus, Pakistan's low tax-to-GDP ratio will be prolonged.
Apr 11, 2013 Pakistan: getting it wrongOne country which definitely isn't suffering from a surfeit of FDI is Pakistan, which is looking more and more like a failed state. The UK's House of Lords is far from the first body to criticize Pakistan's elite for helping themselves at the public trough rather than paying their taxes. Their Lordships were worrying about the aid budget, but Hilary Clinton was on their case constantly while she was at the State Department, and the IMF has been vocal as well. Only two million people out of 190m pay taxes, and they are not the richest. Net FDI in the first eight months of the current year was a pathetic half a billion dollars, and now there is a balance of payments crisis. Successive finance ministers make great play of their efforts to broaden the tax net – but nothing happens. No prizes for guessing why: there is a kleptocracy, and it's not in their interests to change anything. The House of Lords is right to withold aid, which will just be stolen, and you are right not to set up a business in Pakistan. Even the Ukraine might be a better place.