Energy and Tax Reforms Household Analysis from Pakistan (W - 147)

Energy and Tax Reforms Household Analysis from Pakistan (W - 147)

Publication details

  • Friday | 19 Sep, 2014
  • Vaqar Ahmed, Muhammad Adnan
  • Working Papers
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Dr. Vaqar Ahmed and Muhammad Adnan

Abstract 

This paper focuses on the household perceptions across Pakistan regarding the necessary taxation and energy sector reforms. The key objectives are to assess: a) the understanding of respondents regarding challenges and interventions under both reform programmes, and b) willingness to embrace the adjustment that may be required to implement reforms. The survey reached out to 3,800 households in certain districts, including Faisalabad, Hyderabad, Karachi, Multan, Peshawar, Rawalpindi, and Quetta. The timing of this survey is important, as it was carried out immediately after the 2013 general elections. This exercise, therefore, provides a good benchmark against which public expectations from the government can be traced as the tenure proceeds. The findings of this survey shows that, most respondents’ ignorance about    tax default results  in an increase in fiscal deficit and government borrowing, which in turn create inflation and reduce purchasing power. Also, there is a lack of understanding about the fact that the rootcause of energy crisis is the continuous reliance on subsidies and power theft. This survey also provides two important entry points for the policy makers. First, a significant proportion of population is willing and has ability to pay a) increased taxes if decent utilization of their contributions is demonstrated, and b) higher power bills if given a certainty of reduction in unscheduled power cuts. Second, any painful future adjustment resulting from economic reforms will also require taking in to confidence those segments of population who do not trust the current tax administration machinery and energy sector governance.