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Redistributive Effects of Fiscal Policy across the Income Groups in the Urban-Rural Areas of Pakistan

Author

Listed:
  • Nasim Shah Shirazi

    (Kulliyyah of Economics and Management Sciences, International Islamic University, Malaysia.)

  • Muhammad Ilyas

    (Allama Iqbal Open University, Islamabad.)

  • Mehboob Ahmad

    (Allama Iqbal Open University, Islamabad.)

Abstract
There exist a large number of studies related to the estimates of government budgetary redistributive effects and its related problems with regard to different countries of the world.1 Studies of the impacts of government expenditures and taxes in Pakistan have been conducted within the framework of either incidence of taxes or the impact of expenditures across the income groups. The studies carried out by Azfar (1972); Jeetun (1978); Alauddin and Raza (1981) Malik and Saqib (1985, 1989) cover different aspects of taxation—tax incidence, progressivity or regressivity of the tax system across the income groups/individuals and regions. These studies did not discuss the expenditure side of the budget. Shirazi (1996) analysed the impact of government transfer programmes (Zakat and Ushr) across the income deciles. Ghaus (1989) studied the incidence of provincial and municipal government service-related expenditure benefits in Karachi metropolitan and therefore, the scope of her study was limited to one city only. Despite the existence of a rich bibliography on the subject of government redistrbutive budgetary effects and its related problems, no study is available which covers the overall redistributive impacts of government budgetary policy in Pakistan. This study explores the impacts of government expenditures and taxes on the distribution of income across various income groups along with net fiscal impacts in the urban-rural areas of Pakistan. The rest of our study is organised as follows. In the following section, Part II, we describe the methodology and data set. In Part III, the results of the study are presented. The Part IV concludes the paper.

Suggested Citation

  • Nasim Shah Shirazi & Muhammad Ilyas & Mehboob Ahmad, 2001. "Redistributive Effects of Fiscal Policy across the Income Groups in the Urban-Rural Areas of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 40(4), pages 519-533.
    • Handle: RePEc:pid:journl:v:40:y:2001:i:4:p:519-533
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    References listed on IDEAS

    as
    1. Snodgrass, Donald R, 1974. "The Fiscal System as an Income Redistributor in West Malaysia," Public Finance = Finances publiques, , vol. 29(1), pages 56-76.
    2. Muhammad Hussain Malik & Najam Us Saqib, 1989. "Tax Incidence by Income Classes in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 28(1), pages 13-26.
    3. Engel, Eduardo M. R. A. & Galetovic, Alexander & Raddatz, Claudio E., 1999. "Taxes and income distribution in Chile: some unpleasant redistributive arithmetic," Journal of Development Economics, Elsevier, vol. 59(1), pages 155-192, June.
    4. Aisha Ghaus*, 1989. "The Incidence Of Public Expenditure In Karachi," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 8(1), pages 86-109.
    5. Ruggeri, G C & Van Wart, D & Howard, R, 1994. "The Redistributional Impact of Government Spending in Canada," Public Finance = Finances publiques, , vol. 49(2), pages 212-243.
    6. Muhammad Hussain Malik & Najam-Us-Saqib, 1985. "Who Bears the Burden of Federal Taxes in Pakistan?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 24(3-4), pages 497-509.
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    Cited by:

    1. Ghulam Sarwar & Zahid Ullah Khan & Ahmad Saeed & Muhammad Sarfraz, 2023. "Fiscal Consolidation and Income Inequality Nexus: Evidence from Pakistan," Journal of Economic Impact, Science Impact Publishers, vol. 5(3), pages 287-292.
    2. Khalil Ahmad & Safdar Ali & Ayesha Haider & Muhammad Shahid & Muhammad Mudassar Naushahi, 2021. "Fiscal Implications for Rural-Urban Income Inequality: The Case of Pakistan," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 246-259.
    3. Haroon Jamal* & Sohail Javed**, 2013. "Incidence of general sales tax in Pakistan : Latest estimate," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 23(2), pages 73-95.

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