Despite the fact that Central Government indirect taxes make
up approxi¬mately three-fourths of the combined revenue of the Central
and Provincial Governments in Pakistan, virtually no detailed studies of
these taxes and their rate structure, revenue structure, effect on
prices, and effect on resource allocation, have been undertaken as yet.
This paper summarizes some of the preli¬minary findings of one part of
the studies on taxation now underway at the Pakistan Institute of
Development Economics. A companion piece on the rate structure of these
taxes appears in this issue of the Review. Further analysis is
necessary, however, both in combining the results of these two studies
and in bringing to bear other evidence such as price behaviour,
underlying commo¬dity flows, and the impact of the various licensing
systems in operation in Pakistan, before any firm conclusions about the
impact of indirect taxes, ttieir elasticity, and their incidence, can be
formed.