Week No: 6

Public Finance Definition

Public finance is the approach to managing the public funds in the country’s
economy that plays the most important role in the development and growth of the
nation, both domestically and internationally. It also affects every stakeholder of
the country, whether a citizen or not. The public finance economics accounts for
the government revenue and expenditure and the assessment of desired outcomes is
calculated accordingly.

Public finance is the way of managing public funds. However, it is limited to

administering public funds and other things like price stability, economic
growth, income inequality, unemployment, human rights, etc. Management of
public finance is the wider term. It requires proper planning, allocation of
resources, and controlling the unfavorable situations, etc., by making the financial
and fiscal policies, budgets, etc., to ensure the nation’s growth.
Every country needs money to run. The country’s revenue is the collection of
various taxes and returns on the investment, and the government expended from
the collection of the revenue. Some expenditures are healthcare, medical facilities,
salaries to the staff, members, etc. All the revenue and expenditure are collected
by or for the public. Hence, finance is called public finance, where the role of the
people is large in terms of contribution. It deals with the revenue and expenditure
at every stage the public is involved, whether at the state or central levels. Public
finance theory plays an important role in developing the economy as its growth
largely depends on its proper utilization.

Objectives

Let us understand the objectives of the public finance economics which is highly
regarded and one of the highest forms of assessing the performance of a
government or its tenure within an economy. Understanding the basis for such a
theory to govern the funds collected from the citizens of the country would help us
put things relating to the government and its management into perspective.

1 – Managing Public Needs

The main objective is managing the basic needs of the public like food, shelter,
health, infrastructure, and education. All these are the government’s
responsibilities so that the fundamental public needs are fulfilled and contribute to
the development of the economy.

2 – Economic Development

Proper management leads to economic development that leads to the nation’s

growth.

3 – Removes Inequality

It also aims at removing the inequality by proper allocation of resources, i.e.,

providing relief to the poor by collecting taxes from the rich class people.

4 – Maintaining Price Stability

It helps control inflation by various packages and means for its development.
Direct and Indirect Taxes in Pakistan: Types, Ratio, and Challenges

Taxation is an essential source of revenue for the government of Pakistan. The

government collects taxes from individuals and businesses to finance its activities,
including providing public services, defence, and infrastructure. There are two
main types of taxes in Pakistan: direct and indirect. In this article, we will explore
the differences between these two types of taxes and provide a list of the different
types of direct and indirect taxes in Pakistan.

Direct and Indirect Taxes:

Direct taxes are levied on the income and wealth of individuals and businesses.
Examples of direct taxes in Pakistan include income, wealth, and corporate taxes.
These taxes are paid directly by the taxpayer to the government. The government
uses a progressive tax system, which means that the more an individual or business
earns, the higher its tax rate.

Indirect taxes, on the other hand, are levied on goods and services. These taxes are
paid by consumers when they purchase goods or services. Examples of indirect
taxes in Pakistan include sales tax, value-added tax (VAT), excise duty, and
customs duty. Indirect taxes are generally regressive, meaning that they
disproportionately affect lower-income individuals.

The main difference between direct and indirect taxes in Pakistan is who pays the
tax. Individuals or businesses pay Direct taxes, while indirect taxes are paid by
consumers when they purchase goods or services. Direct taxes are generally
progressive, meaning they have a higher tax rate for higher-income individuals,
while indirect taxes are regressive, disproportionately affecting lower-income
individuals.

Direct and Indirect Tax Ratio in Pakistan:

In Pakistan, the tax system is heavily reliant on indirect taxes. According to the
State Bank of Pakistan, in the fiscal year 2020, indirect taxes accounted for 63.7%
of total tax revenue, while direct taxes accounted for only 36.3%. This ratio has
remained relatively stable over the past decade, with indirect taxes consistently
accounting for a larger share of total tax revenue.

List of Direct and Indirect Taxes in Pakistan:

Here is a list of the different types of direct and indirect taxes in Pakistan:

Direct Taxes:

 Income Tax
 Corporate Tax
 Wealth Tax
 Capital Value Tax
 Property Tax
 Agricultural Income Tax
 Federal Excise Duty (FED) on Services
Indirect Taxes:

 Sales Tax
 Value-Added Tax (VAT)
 Excise Duty
 Customs Duty
 Federal Excise Duty (FED) on Goods
 Withholding Tax
 Stamp Duty

Types of Indirect Taxes in Pakistan:

Pakistan has several indirect taxes, including sales tax, value-added tax (VAT),
excise duty, customs duty, federal excise duty (FED) on goods, withholding tax,
and stamp duty. Sales tax and VAT are the essential indirect taxes in revenue
generation, accounting for around 70% of total indirect tax revenue.

Conclusion:

In conclusion, the tax system in Pakistan is heavily reliant on indirect taxes, with
indirect taxes accounting for a larger share of total tax revenue than direct taxes.
The government has been trying to increase the share of direct taxes in total tax
revenue through tax reforms and other measures, but progress has been slow.
Pakistan has several types of direct and indirect taxes, each with its unique
characteristics and impact on taxpayers. Individuals and businesses in Pakistan
need to understand the different types of taxes and how they are levied to comply
with tax laws and regulations.

Overall, the government of Pakistan faces significant challenges in collecting taxes

and increasing the share of direct taxes in total tax revenue. These challenges
include a large informal economy, low tax compliance, and a narrow tax base. The
government has taken several measures to address these challenges, such as
expanding the tax base, improving tax administration, and implementing tax
reforms.

The tax system in Pakistan is complex and has unique characteristics. The
government must collect taxes and increase direct tax share in total tax revenue.

Week No: 10

Economic growth and Development

 Economic growth means an increase in real national income / national

output.
 Economic development means an improvement in the quality of life and
living standards, e.g. measures of literacy, life-expectancy and health care.
 Ceteris paribus, we would expect economic growth to enable more
economic development. Higher real GDP enables more to be spent on health
care and education.
 However, the link is not guaranteed. The proceeds of economic growth
could be wasted or retained by a small wealthy elite.
Graph showing GDP vs GPI

GDP per capita is a measure of economic growth

GPI = Genuine Progress Indicator. This is a more comprehensive measure of living

standards than just GDP. GPI also takes into account the environment, health care,
pollution and education and therefore can be used as a measure of economic
development. It shows that from 1950 to 1980, economic growth was increasing
GPI. But, after the mid 1980s, the relationship broke down.
Economic growth

Economic growth in the UK

Economic growth measures an increase in Real GDP (real output). GDP is a
measure of the national income / national output and national expenditure. It
basically measures the total volume of goods and services produced in an
economy.
Economic development

Development looks at a wider range of statistics than just GDP per capita.
Development is concerned with how people are actually affected. It looks at their
actual living standards and the freedom they have to enjoy a good standard of
living.

Measures of economic development will look at:

  Real income per head – GDP per capita
 Levels of literacy and education standards
 Levels of healthcare e.g. number of doctors per 1000 population
 Quality and availability of housing
 Levels of environmental standards
 Life expectancy.
Absolute Poverty. Do people have sufficient resources to maintain a healthy diet
and basics of life such as shelter? Economic growth may be essential to enable
higher incomes for people to be able to buy more food. However, economic growth
doesn’t necessarily improve everyone’s living standards. Economic growth could
bypass the poorest sections of society because they don’t have the ability to take
part. A key issue is whether the benefits of economic growth are equitably
distributed amongst different groups of society.
Education standards. e.g. literacy rates. Economic growth may enable more
money to be spent on education. However, there is no guarantee that the proceeds
of growth will be used to improve education standards. There is often a weak
correlation between GDP and literacy rates.
Environmental standards. Economic growth can actually harm the environment
and people’s living standards. For example, higher output could cause more
pollution. If higher growth involves cutting down forests – this could have adverse
environmental consequences in long-term.
Transport / Infrastructure Economic development would require improvements
in infrastructure and transport. This may be important for regions that may be cut
off from the main areas of economic growth.
Measures of economic development

Measuring economic development is not as precise as measuring GDP because it

depends on what factors are included in the measure.

There are several different measures of economic development, such as the Human
development index (HDI)
Human development index (HDI)
The HDI combines:
1. Life Expectancy Index. Average life expectancy compared to a global
expected life expectancy.
2. Education Index
1. mean years of schooling
2. expected years of schooling
3. Income Index (GNI at PPP)
more on Human development index (HDI)
Factors affecting economic growth in developing countries

 Levels of infrastructure – e.g. transport and communication

 Levels of corruption, e.g what percentage of tax rates are actually collected
and spent on public services.
 Educational standards and labour productivity. Basic levels of literacy and
education can determine the productivity of the workforce.
 Levels of inward investment. For example, China has invested in many
African countries to help export raw materials, that its economy needs.
 Labour mobility. Is labour able to move from relatively unproductive
agriculture to more productive manufacturing?
  The flow of foreign aid and investment. Targeted aid, can help improve
infrastructure and living standards.
 Level of savings and investment. Higher savings can fund more investment,
helping economic growth.
Economic growth without development

It is possible to have economic growth without development. i.e. an increase in

GDP, but most people don’t see any actual improvements in living standards. This
could occur due to:

1. Economic growth may only benefit a small % of the population. For

example, if a country produces more oil, it will see an increase in GDP.
However, it is possible, that this oil is only owned by one firm, and
therefore, the average worker doesn’t really benefit.
2. Corruption. A country may see higher GDP, but the benefits of growth may
be syphoned into the bank accounts of politicians
3. Environmental problems. Producing toxic chemicals will lead to an increase
in real GDP. However, without proper regulation, it can also lead to
environmental and health problems. This is an example of where growth
leads to a decline in living standards for many.
4. Congestion. Economic growth can cause an increase in congestion. This
means people will spend longer in traffic jams. GDP may increase but they
have lower living standards because they spend more time in traffic jams.
5. Production not consumed. If a state-owned industry increases output, this is
reflected in an increase in GDP. However, if the output is not used by
anyone then it causes no actual increase in living standards.
6. Military spending. A country may increase GDP by spending more on
military goods. However, if this is at the expense of health care and
education it can lead to lower living standards.
Week No. 12

Mining in Pakistan
Mining is an important industry in Pakistan. Pakistan has deposits of several
minerals including coal, copper, gold, chromite, mineral salt, bauxite and several
other minerals. There are also a variety of precious and semi-precious minerals that
are also mined. These include peridot, aquamarine, topaz, ruby, emerald, rare-earth
minerals bastnaesite and xenotime, sphene, tourmaline, and many varieties and
types of quartz.
The Pakistan Mineral Development Corporation is the responsible authority for the
support and development of the mining industry. The Gemstones Corporation of
Pakistan looks after the interests of stake holders in gemstone mining and polishing
as an official entity. Balochistan has the most mineral deposits among the
provinces of Pakistan, with Sindh rich in coal deposit and Khyber
Pakhtunkhwa rich in gems. Oil, gas and minerals used in nuclear energy purposes
are mined by the federal government. The mining of other minerals is a provincial
concern. Currently around 52 minerals are mined and processed in Pakistan.
Mineral salt
Rock salt makes for some beautiful texture on the walls and the ceiling

Salt has been mined in the region since 320 BC. The Khewra Salt Mines are
among the world's oldest and biggest salt mines. Salt is mined at Khewra in an
underground area of about 110 square kilometres (42 sq mi). Khewra salt mine has
an estimated total of 220 million tonnes of rock salt deposits. The current
production from the mine is 325,000 tons of salt per annum.
Copper and gold
In Reko Diq, Balochistan, deposits of copper and gold are present. Antofagasta, the
company which possesses the Reqo Diq field, is targeting an initial production of
170,000 metric tons of copper and 300,000 ounces of gold a year. The project may
produce more than 350,000 tons a year of copper and 900,000 ounces of gold.
There are also copper deposits in Daht-e-Kuhn, Nok Kundi, located in Chaghi
District.
Iron ore
Iron ore is found in various regions of Pakistan including
Nokundi, Chiniot, Kalabagh the largest one, Haripur and other northern areas.
In February 2015, reserves were found in Chiniot, around 160 kilometres
northwest of Lahore, by a Chinese group, the Metallurgical Cooperation of China.
A senior provincial administrative official told AFP that initial estimates indicated
500 million tonnes of iron ore had been discovered. The extracted iron had been
tested in Swiss and Canadian laboratories, which were successful in finding 60-65
percent of it to be high grade.
Gems and other precious stones
A number of precious stones are mined and polished for local as well as export
purposes. The centre point of this operation is Khyber-Pakhtoonkhwa and most
recently Gilgit-Baltistan. These
include actinolite, hessonite, rodingite, agate, idocrase, rutile, aquamarine, jadeite,
ruby, amazonite, kunzite, serpentine, azurite, kyanite, spessartine (garnet), beryl, m
organite, spinel, emerald, moonstone, topaz, epidote, pargasite, tourmaline, garnet (
alamandine), peridot, turquoise, grossular, quartz (citrine and other varieties)
and vesuvianite. The export earned from these gems is more than 200 Million
dollars.
Week No. 15

Ministry of Planning
Development & Reform
Overview of SDGs
OVERVIEW OF SDGS
At the Sustainable Development Summit on 25 September, 2015, UN Member States
adopted the 2030 Agenda for Sustainable Development, which includes a set of 17
Sustainable Development Goals (SDGs) to end poverty, fight inequality and injustice, and
tackle climate change by 2030.
he SDGs, otherwise known as the Global Goals, build on the Millennium Development
Goals (MDGs), eight anti-poverty targets that the world committed to achieving by 2015.
The MDGs, adopted in 2000, aimed at an array of issues that included slashing poverty,
hunger, disease, gender inequality, and access to water and sanitation. Enormous
progress has been made on the MDGs, showing the value of a unifying agenda
underpinned by goals and targets. Despite this success, the indignity of poverty has not
been ended for all.
The new Global Goals, and the broader sustainability agenda, go much further than the
MDGs, addressing the root causes of poverty and the universal need for development that
works for all people.

The government has internalized Sustainable

Development Goals (SDGs) as National Goals and this
 is a major policy shift.

Our Projects

 1. China Pak Economic Corridor

 2. Development Communication
 3. Peace and Development Unit
 4. Young Development Fellows
 5. URAAN
 6. PSDP Releases
 7. Center for Social Entrepreneurship
 8.National Endowment Scholarships for Talent (NEST)
 9. Centre for Rural Economy (CRE)
 10. Banao Pakistan
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