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    Mahmood Tahir
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    Fiscal policy uses government spending and taxation to influence the economy. It can have expansionary, contractionary, or neutral stances. An expansionary policy involves government spending exceeding tax revenue to stimulate the economy, while a contractionary policy reduces spending below tax revenue. The objectives of Pakistan's fiscal policy include self-reliance, export expansion, and reducing income disparity. However, Pakistan faces budget shortfalls due to issues like tax evasion, corruption, and the high costs of maintaining security.

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    Fiscal policy uses government spending and taxation to influence the economy. It can have expansionary, contractionary, or neutral stances. An expansionary policy involves government spending exceeding tax revenue to stimulate the economy, while a contractionary policy reduces spending below tax revenue. The objectives of Pakistan's fiscal policy include self-reliance, export expansion, and reducing income disparity. However, Pakistan faces budget shortfalls due to issues like tax evasion, corruption, and the high costs of maintaining security.

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    12 views12 pages

    Fiscal Policy

    Uploaded by

    Mahmood Tahir
    Fiscal policy uses government spending and taxation to influence the economy. It can have expansionary, contractionary, or neutral stances. An expansionary policy involves government spending exceeding tax revenue to stimulate the economy, while a contractionary policy reduces spending below tax revenue. The objectives of Pakistan's fiscal policy include self-reliance, export expansion, and reducing income disparity. However, Pakistan faces budget shortfalls due to issues like tax evasion, corruption, and the high costs of maintaining security.

    Copyright:

    Attribution Non-Commercial (BY-NC)
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    Introduction Of Fiscal Policy

    Fiscal Policy
    In economics, fiscal policy is the use of

    government expenditure and revenue collection (taxation) to influence the economy.

    Fiscal Policy Effects


    Fiscal policy decisions have a widespread

    effect on the everyday decisions and behaviour of individual households and businesses

    Stances of fiscal policy


    The three possible stances of fiscal policy are

    neutral, expansionary and contractionary. The simplest definitions of these stances are as follows:

    Neutral Stance
    A neutral stance of fiscal policy implies a

    balanced economy. This results in a large tax revenue. Government spending is fully funded by tax revenue and overall the budget outcome has a neutral effect on the level of economic activity.

    Expansionary
    An expansionary stance of fiscal policy involves

    government spending exceeding tax revenue.

    Contractionary
    A contractionary fiscal policy occurs when

    government spending is lower than tax revenue.

    Fiscal Policy of Pakistan

    Objectives of Fiscal Policy of Pakistan


    1.self reliance

    2.expansion of exports 3.containment of import of luxury and non-essential goods 4.promotion of investment 5.reduction in income disparity

    Causes of Tax Evasion


    1.People do not want to disclose their true

    income 2.Too many unlawful business activities such as drugs, hoarding, black money, etc. 3.No fear of punishment 4.Complex tax structure 5.Some economic sectors are exempted: Agriculture,real estate and capital gain 6.Tax payers see their taxes being used to further rich citizens interests. 7.Uncontrolled inflation and high cost of living. 8.Low level of literacy among taxpayers 9.Tax pilferage has become the rule,and compliance an exception

    Why Pakistan is Facing budget shortfall (cont).


    1.Too many factories are closed or in partial

    production for want of power and gas 2.Tax Evasion by well performing industries (cement) 3.Stock Exchange and Real Estate pay minimal tax. 4.Corruption by Tax Officials 5.Law and Order causing burden on the Expenditure side by way of compensation to the affected and mobilization to send forces

    THANK YOU

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