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The poverty implications of alternative tax reforms: results from a numerical application to Pakistan (English)

This paper presents results from four simulations of the impact of potential tax reforms in Pakistan on poverty, shared prosperity, and inequality. The simulations are carried out in the context of a dynamic computational general equilibrium model that incorporates endogenous tax evasion. The simulations link the computational general equilibrium model to household survey data that are incorporated in a micro simulation model. The combined models suggest that equal yield increases in sales and corporate tax rates differ mildly in their impacts on consumption and poverty. Endogenously modeled tax evasion plays an important role in the results.

Details

  • Author

    Feltenstein,Andrew, Mejia-Mantilla,Carolina, Newhouse,David Locke, Sedrakyan,Gohar

  • Document Date

    2017/08/14

  • Document Type

    Policy Research Working Paper

  • Report Number

    WPS8164

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Pakistan,

  • Region

    South Asia,

  • Disclosure Date

    2017/08/14

  • Disclosure Status

    Disclosed

  • Doc Name

    The poverty implications of alternative tax reforms: results from a numerical application to Pakistan

  • Keywords

    poverty and social impact analysis;sales tax increase;corporate income tax;Tax Evasion;computable general equilibrium model;Poverty and Equity;corporate tax;base case;rate of return to investment;rate of return to capital;marginal product of labor;corporate income tax rate;tax rate on capital;corporate tax rate;sales tax rate;underground economy;tariff increase;real income;rental price of capital;corporate income tax returns;increase in tax revenue;consumer price index;personal income tax;tariff rate;landless farmer;impact on poverty;alternative tax policy;real consumption;Tax Reform;ownership of asset;household survey data;rate of change;social accounting matrix;budget deficit;Tax Administration;urban sector;tax on capital;factor of production;change in poverty;food energy intake;average inflation rate;corporate profit tax;incidence of poverty;cost of production;integrated household survey;amount of credit;demand for import;reduction in poverty;rate of depreciation;per capita consumption;returns to capital;elasticity of demand;increasing tax revenue;tax regime change;exchange rate devaluation;terms of consumption;measure of inequality;poverty headcount rate;production of value;official poverty line;domestic price index;alternative tax regimes;statutory tax rate;aggregate capital stock;present value calculation;tax evasion mechanism;poor tax collection;working age population;form of tax;sales tax evasion;rate of investment;types of capital;foreign interest obligation;share of employment;progressive income tax;effect of taxes;general equilibrium analysis;partial equilibrium model;real consumption index;sectors of society;reduction in consumption;level of consumption;intertemporal utility function;capital tax rate;household real income;Rural Sector;real gdp;household income;Exchange Rates;Tax Code;

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Citation

Feltenstein,Andrew Mejia-Mantilla,Carolina Newhouse,David Locke Sedrakyan,Gohar

The poverty implications of alternative tax reforms: results from a numerical application to Pakistan (English). Policy Research working paper,no. WPS 8164 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/667611502717246610/The-poverty-implications-of-alternative-tax-reforms-results-from-a-numerical-application-to-Pakistan