Dr. Turab Hussain briefly reviews the impact of industrialization and trade on economic development across time and regions. Some of the key lessons from varied country experiences are then used to describe the case of Pakistan and explain the country’s recent economic predicament characterized by rapid de-industrialization.
Dr Syed Turab Hussain teaches at the Lahore University of Management Sciences [LUMS], Pakistan as an Assistant Professor. He received his undergraduate degree from the College of Wooster, Ohio, USA in 1996 and subsequently studied for his Master’s degree and Ph.D. in Economics at the University of Essex in the UK. Dr. Hussain taught at Essex as a Lecturer for a year prior to joining the Economics faculty in LUMS in 2003. Since then he has worked on various issues within the area of Development Economics and International Trade such as migration and policy, regional trade, dispute settlement mechanism and services trade within the World Trade Organization. Recently he led a team of seven economists in developing the Industrial Policy of Pakistan for the Ministry of Industries and Production, Government of Pakistan. Currently, he teaches Trade Theory at the undergraduate level and Trade and Development at the graduate level. He is also an alumnus of the Cambridge Advance Program on Rethinking Development Economics (CAPORDE).
Starting with the Sales Tax Committee, 1949, a total of 16 Tax Reform Commissions/Committees (TRCs) have been established by the state of Pakistan to cure and reform its taxation system. At the end, however, each reform initiative appears to have left the tax system unhealthier, more distortion-ridden, log-jammed and capacity-deficient than before. Tax Reforms in Pakistan – An Institutional Perspective is a book-length work that wades through the history of tax reforms in Pakistan, diagnoses the reasons for failure of reforms, and indicates some direction for the future.
Dr. Muhammad Ashfaq Ahmed is a career IRS Pakistan officer, presently working as the Director General, International Taxes, Federal Board of Revenue, Islamabad. He holds a Master’s in English (Language & Literature) from the University of the Punjab, MS in (Economic) Policy Analysis from Saitama University, Japan, and PhD in Political Economy from the Quaid-e-Azam University, Islamabad / University of Washington, Seattle, USA. Dr. Ahmed has to his credit the World Bank Fellowship (1998-00), Fulbright Fellowship (2003-04), Charles Wallace Fellowship (2009-10), and Hubert H. Humphrey Fellowship (2010-11). His research interests include political economy of international taxation, states’ extractive system, state autonomy, state building, state capacity, and governance.
In recent years, a rich literature has developed that studies Public Finance issues faced by emerging economies, especially those characterized by weak enforcement. This presentation reviews that literature, focusing on what lessons can be drawn for tax policy. I specifically discuss how emerging economies can curtail tax non-compliance and build fiscal capacity by optimizing the structure of taxes, tax rates, and tax bases.
Dr. Mazhar Waseem is a public finance economist with a special focus on taxation issues. His recent research exploits discontinuities created by tax systems and policy reforms to study behavioral responses to taxation and their implications for optimal tax policy in low enforcement capacity settings. In addition, he is interested in studying how the presence of informality affects the efficiency and compliance of modern broad-based taxes – income tax and VAT – in developing countries. Before starting his research career, Mazhar served in the civil service of Pakistan as an officer of the Customs and Excise Service. His broader research interests lie in the areas of public economics, public finance, and development. He holds an MSc and a Ph. D in economics, both from the London School of Economics.
We design a field experiment to study how the allocation of authority between frontline procurement officers and their monitors affects performance both directly and through the response to incentives. In collaboration with the government of Punjab, Pakistan, we shift authority from monitors to procurement officers and introduce financial incentives to a sample of 600 procurement officers in 26 districts. We find that autonomy alone reduces prices by 9% without reducing quality and the effect is stronger when the monitor is less efficient. In contrast, performance pay reduces prices only when the monitor is efficient. The results illustrate that organizational design and anti-corruption policies must balance agency issues at different levels of the hierarchy.
Dr. Adnan Q. Khan is the Professor in Practice with School of Public Policy at the London School of Economics. He is also affiliated with BSC at Harvard, CERP and IGC. He works on state capacity, development and public policy and has in the past worked as a bureaucrat.
Taxes on land and physical properties represent the largest source of untapped local revenue sources for many developing countries, including Pakistan. Such taxes can provide a steady stream of income to governments, and in the case of land taxes, do this without impeding the transfer of land towards its most efficient use. This framing presentation highlights the importance of land and property taxes, outlines main policy considerations with reference to the same, and attempts to contextualize the debate to Pakistan.
Shahrukh Wani is an Economist at the International Growth Centre (IGC)’s Cities that Work Initiative based at the Blavatnik School of Government, University of Oxford. At IGC Shahrukh works to translate research into urban policy guidance for policymakers in Africa and South Asia. His research and practice focus on municipal finances and urban governance, with a particular interest in urban institutional arrangements, decentralization, public-private partnerships, and taxation of land and property. Before his current role, Shahrukh worked on IGC’s partnership with UN-Habitat to implement the strategic phase of British Foreign Office’s £80 million Global Future Cities Program. Prior to this, he worked with ActionAid UK on taxation in Pakistan, and on poverty measurement at the Innovations for Poverty Action (IPA) and the Grameen Foundation. Shahrukh is also a frequent writer on public policy, particularly on his native Pakistan. He tweets @ShahrukWani.
This paper analyzes the effect of an Indian value added tax (VAT) on production. The VAT system features a revenue-based exemption threshold intended to exempt small firms, which also incentivizes firms to either appear or remain small. Analysis using a novel dataset created by linking detailed establishment and commodity-level survey data to time-varying and commodity-specific VAT rates indicates that firms' reported revenues are on average 10 percent lower in the neighborhood of the exemption threshold. This neighborhood represents about 1 percent of total manufacturing output. This output response is largely due to compliance costs and additional enforcement associated with VAT registration rather than increased tax liability. Based on the revenue-to-input cost ratio of firms just below the exemption threshold, the observed production distortions appear to correspond to production changes rather than tax noncompliance. These findings indicate that the VAT would distort production even with perfect enforcement and that efforts to reduce firms' compliance burden could be welfare enhancing. Because the exemption threshold for a VAT is a ubiquitous and salient size-based regulatory threshold for most firms in developing countries, the insights and challenges illustrated in the context of the Indian VAT on manufacturing are widely applicable.
Dr. Tejaswi Velayudhan is a post-doctoral researcher in the Department of Economics at The Ohio State University and will be an Assistant Professor at the Department of Economics at UC Irvine from Fall 2020. She received her Ph.D. in Economics from the University of Michigan in May 2019. Her fields are Public Finance and Development Economics. Her current research covers topics such as the economic impacts of consumption taxes, intergovernmental competition, and determinants of voluntary tax compliance.
The UN Tax committee in its October 2019 session presented a draft paper on the taxation of Collective Investment Vehicles. In an age where the digitization of systems is increasing informality across borders, there is a need to begin to unpack how these digital systems are used at an industry level. The debates on digitization still remain at a very meso level. As a result, this paper which is the result of research being conducted in Africa and Latin America, will reflect on how this field is being regulated and whether it is adding to issues of illicit financial flows and tax avoidance and evasion at a more granular level in order to better understand how to develop and regulate the investment sector.
Professor Attiya Waris is the Director of Research and Enterprise for the University of Nairobi (UoN). She is the only Professor of Fiscal Law and Policy in Eastern Africa. She holds a PhD in Law and is a specialist in Fiscal Law, Policy and Development, is an advocate, company secretary and arbitrator of 20 years standing and Chairs the Fiscal Studies Committee at the UoN which spearheaded the first agreement on sharing of data between a University and a revenue agency globally. She teaches at the Law School, University of Nairobi, Kenya, the Law School, University of Rwanda and the Centre for Human Rights, University of Pretoria and has previously taught in Malaysia and the United Kingdom. She has researched and published on global, African, Asian, European as well as Latin American issues. Her book 'Tax and Development’ (2013) is the first publication globally that links the areas of tax and human rights and her more recent publication ‘Financing Africa’ is the first publication globally to map out African fiscal systems. She was a nominee in 2017 for the position of UN Special Rapporteur on Development and is an Observer to the UN Tax Committee.
The role of taxpayer education in improving tax compliance has been largely unexplored in the literature. This paper starts filling this gap by providing the first rigorous evaluation of the effectiveness of taxpayer education on knowledge, perceptions, and compliance in Rwanda, or in any other country. Our analysis is based on a unique dataset that combines administrative and survey data. We show that taxpayer education results in significant and large increases in knowledge, which starts from a very low level at baseline. We also show that the program contributes to improve compliance behavior. Our strongest result is that training new taxpayers helps bringing them into the habit of filing tax declarations – an obligation many fail to comply with. In terms of policy, our results show that the benefits of taxpayer education go beyond increased revenue in the short term and include building a habit of tax compliance.
Dr. Giulia Mascagni’s main area of work is taxation, but she also has research interest in public finance, evaluation of public policy, and aid effectiveness. She is an economist by training, holding a PhD in Economics from the University of Sussex. Her main geographical interest lies in African countries, with a particular focus on Ethiopia and Rwanda. Giulia is currently working at IDS as Research Fellow and as Research Director of the International Centre for Taxation and Development (ICTD). At IDS she teaches economics, taxation and public finance at the postgraduate level and on professional short courses. Previously she worked as Associate Tutor at the University of Sussex, as an independent consultant for ITAD, the World Bank, the Overseas Development Institute, and as Adviser and Trainee at the European Commission. Giulia has field experience in Ethiopia, Mozambique and Rwanda, amongst others. In Ethiopia she worked as Associate Economic Affaires Officer at the UN Economic Commission for Africa and she was Resident Researcher at the Ethiopian Development Research Institute in Addis Ababa. In Rwanda, Giulia led a set of large-scale field experiments aiming to understand the determinants of tax compliance.