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Group Members Mudassir Inam. Muhammad Arsal. Wajahat Ali. Hammad Baig.
Topic: Fiscal Policy of Development
Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy. It is the sister strategy to monetary policy through which a central bank influences a nation's money supply. These two policies are used in various combinations to direct a country's economic goals.
Fiscal Policy
Development Country Expansion of Employment Economic Growth Controlling Inflation Increasing the Investment Reduce Inequality the Income and Wealth
Objectives of Fiscal Policy
A tax paid by directly to the government For exampleIncome taxIndirect Tax:A tax which is not deducted from income directly but is paid to someone
who then pay it to government For exampleSales tax
Taxation DirectTax :
Country Groups 1995-1997
Developed Countries 37.9
Developing Countries 18.2
According to IMF 2000
As you seen in table developed OECD countries generally relay ,more strongly on direct tax
Tax Revenue 1985-1997 as a percentage of GDP1995-1997
COUNTRY GROUPS DIRECT TAX INDIRECT TAXOECD COUNTRIES 14.2 11.4AMERICA 15.4 7.0PACIFIC 16.3 8.4DEVELOPING COUNTRIES
5.2 10.5
AFRICA 6.9 11.6ASIA 6.2 9.7MIDDLE EAST 5.0 10.3
Many developing countries face problems of
1. Large fiscal policy Deficits
2. Public expenditures (generally in excess of public revenue)
3. Rising debt burdens
4. Falling commodity prices
5. Growing trade imbalances
6. Declining foreign investments inflows
PROBLEMS
In general the taxation potential of a country depends on five factors.
The level of per capita real income
The degree of inequality in the distribution of that income
The social , political, and the relative power of different groups
The administrative competence, honesty, and integrity of tax gathering branches of government
The industrial structure of the economy
Factors
……….
Personal Income Tax (PIT) is a direct tax levied on income of a person. A person
means an individual, an ordinary partnership, a non-juristic body of person and an undivided estate.
PERSONAL INCOME TAX
Property tax is a tax assessed on real estate. The tax is usually based on the value of the property (including the land) you own and is often assessed by local or municipal governments.
PROPERTY TAX
Corporate income taxes are levied by the U.S. Federal
government and by states on business profits. Understandably,
companies try to use everything in the tax code to lower the cost
of taxes paid by reducing taxable income.
Source of developing countries. Direct and indirect tax. Import and export.
Indirect tax on commodities
Tax rate
Filers and non filers. Unknown about process. Key technology. We must consider optimal tax system rather than ,optimal taxes
(joil slemrod).
Problems of tax administration