Pakistan to Beg and Borrow to Finance 2013-14 Budget
Pakistan's proposed federal budget 2013-14 includes $36 billion in spending with deficit financing of $16 billion. Of this $16 billion, over $5 billion will be borrowed by the federal government to pay the power sector to settle the so-called circular debt. Heavy Tax Burden on the Poor: Direct taxes make up only about 3.5% of Pakistan's federal revenue. The rest comes from indirect taxation, mainly consumption tax, making Pakistan's tax policy among the most regressive in the world. The low-income people who have to spend almost all of their incomes will be paying tax on their entire incomes while the high-income groups who spend a small percentage of their income will pay little in taxes. While the general sales tax (GST), a consumption tax, has been raised from 16% to 17%, vast swaths of the economy have been left out of the tax net. A major weakness in public finances is the lack of fiscal effort by the provinces. With some of the largest segments of economic a...