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International Tax and Public Finance

, Volume 12, Issue 6, pp 723–739 | Cite as

Commercial Policy Reform in Pakistan: Opening up the Economy under Revenue Constraints

  • Sajal Lahiri
  • Anjum Nasim
Article

Abstract

We examine the potential for further reform of sales tax and tariffs on final goods and on intermediate inputs in Pakistan. Analysis is conducted at two levels. First, optimal taxes are computed under the assumption that tax revenue is exogenous and pays for a public good, and these are compared with their current levels. Second, we consider two piecemeal reform exercises to examine whether there is further scope for replacing the two tariffs by sales tax in a revenue-neutral way. Both approaches suggest that there is considerable scope for further reducing tariffs on final goods, but not on intermediate inputs.

Keywords

VAT tariffs government revenue Pakistan 

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Copyright information

© Springer Science + Business Media, Inc. 2005

Authors and Affiliations

  1. 1.Department of EconomicsSouthern Illinois UniversityCarbondaleUSA
  2. 2.Lahore University of Management Sciences, DHALahorePakistan

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