been unable to sustain solid growth. Furthermore, a third of its population now lives below the poverty line, and its literacy rate is abysmally low.
Pakistan's economic instability stems in large part from low government revenue resulting from the elite's use of tax evasion, loopholes, and exemptions. Fewer than three million of Pakistan's 175 million citizens pay any income taxes, and the country's tax-to-GDP ratio is only 9 percent. Tax evasion means fewer resources are available for essential social services.
Pakistan spends too much on defense and too little on development: It has spent twice as much on defense during peacetime as it has on education and health combined.
The government knows how to increase its revenue through tax reform, but the rich and powerful have resisted such measures for fear of lowering their own incomes.
Without sufficient revenue the government will continue to be burdened with an unsustainable debt. It needs to end tax exemptions for the wealthy and develop broader, long-term economic plans for sustainable growth. More >>>
In the past, the United States and other Western nations have come to Pakistan's rescue by paying off debts and funding development initiatives. Pakistan's elite has no reason to support reform as long as these bailouts come with no conditions attached.
Location:Islamabad
