Final Project - Finances for Development

PROBLEM

PAKISTAN: WEAK FISCAL CAPACITY

GOALTO MOBILIZE DOMESTIC RESOURCES THROUGH STRENGHTHENING FISCAL CAPACITY IN ORDER TO MEET SDGS 2016-30.

ISSUES

LACK OF GOOD GOVERNANCE

TRUST DEFICIT BETWEEN STATE AND CITIZENS REGRESSIVE & OBSOLETE TAXATION SYSTEM CORRUPTION CAPITAL FLIGHT (US $ 9.2 BILLIONS PER YEAR) ILLICIT FUND FLOW FISCAL DEFICIT DUE TO HIGH EXPENDITURE LESS EASE IN DOING BUSSINESS IN PAKISTAN

RESULTING IN ALARMING TAX TO GDP RATIO AND DEBT TO GDP RATIO

TO MEET SDGS. Notes: Pakistan has one of the lowest tax-to-GDP ratios in Asia and the country faces serious budget deficits .

LESS RELIENCE ON EXTERNAL FUNDING

SELF PRIDE NATIONAL INTEREST POLICAL STABILITY POVERTY ALLEVIATION SOCIAL DEVELOPMENT LESS EXTERNAL THREATS MEETING SDGS TO BE PART OF

GLOBAL FERTERNITY

REASONS OF PARTICIPATION FROM GOVT AND PRIVATE SECTOR

SOLUTIONS

GOOD GOVERNANCE

DEVOLUTION OF POWER TO GRASS ROOTS FISCAL DECENTRALIZATION COMMUNITY DRIVEN DEVELOPMENT TRANSPARENCY CITIZEN PARTICIPATION IN DECSION MAKING -

PLANNING, BUDGITING AND PROCUREMENT ACESS TO INFORMATION SOCIAL ACCOUNTIBILITY ACCESS TO JUSTICE REFORM IN JUDICIAL SYSTEM ZERO TOLERANCE FOR CORRUPTION FAVOURABLE INVESTMENT CLIMATE

---Almost no one in Pakistan pays income tax.mp4

TAX REFORM DOCUMENTATION OF THE ECOMONY BROADEN TAX BASE RESTRICT TEXEMPTIONS & TAX HEAVENS BRIDGE TRUST DEFICIT BETWEEN STATE AND CITIZENS IMPOSE TAX ON AGRICULTURE BRING INFORAL SECTOR UNDER TAX NET TRAIN AND RESRTUCTURE FEDERAL BUREAU OF REVENUE

(FBR) ENSURE GREATER AUTONOMY OF FBR RECRUIT HONEST AND COMPETENT PROFESSIONAL IN FBR ELIIMINATE CORRUPTION IN FBR USE IT TECHNOLOGY AND SELF-AUTOMATIONNotes. Very few Pakistanis pay income taxes. Out of a total work force of 58 million less than 2 million are registered taxpayers and last year only 0.7 million people actually paid income tax (SDPI, 2013). 2. The main reason behind the low tax to GDP ratio in Pakistan is the tax exemption given to powerful political figures, capitalists and various industrial sectors. The exemptions now amount to Rs 477.1bn- (US $ 0.48 billion) nearly 2 % of the country's GDP) in fiscal year 2013-14. (M. Khan 2014).

CURBING CAPITAL FLIGHT & ILLICIT FUND FLOW

RESTRICTING CROSS BORDER MOVENENT OF CAPITAL THROUGH ILLIGAL CHANNELS

REPATRIATION OF PRIVATE CAPITAL HELD ABRAOD STRICT MONITORING ON AIRPORTS STRINGENT ENFORCEMENT OF ANTI-MONEY

LAUDERING AND TERRRORIST FINANCING CURTAILING TRADE MISINVOICING CUSTOM ENFORCEMENT

Notes:1. According to Mr. Yasin Anwar, Governor State Bank of Pakistan, $25m were being ‘smuggled’ out of

the country in briefcases every day from four major airports.2. Pakistan ranks 111, US $ 143 Million Estimates of illicit financial flows are taken from Global Financial Integrity’s Illicit Financial Flows from Developing Countries 2000-2009 report.

LINKING ODA TO MAINTAIN FISCAL DICIPLINE

USE OF ODA AS CATALYST SPEND ODA ON SOCIAL DEVELOPMENT RATHER

ON BUDGETARY SUPPORT LINK ODA TO STRENGHTEN FISCAL DICIPLINE

---MPs- Link Pakistan aid to tax reform - YouTube.mp4

CONCLUSION

Pakistan has the capacity to mobilize enough domestic resources to meet SDGs commitments primarily

through good governance, tax reforms and zero tolerance

towards corruption and capital flight.