International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss


Impact of Agricultural Income Tax on Household Welfare and Inequality: Pakistan A Case-in-Point
Hasnain A. Naqvi, Muhammad Mohsin Hakeem, Dr. Rashid A. Naeem

This article intends to explore the impact of Agricultural Income Tax on Household Welfare and Inequality and the situation in Pakistan is reviewed as a Case-in-Point. A computable general equilibrium model is used to analyse the implementation of Agricultural Income Tax for Pakistan. The model analyses the economic implications of Agricultural Income Tax and reduction in sales tax for production activities to adjust the budget surplus. The experiment i.e., imposition of tax on agriculture income, was based on a combination of the said two elements. The objective of this experiment was to determine the possibility of implementation of agricultural income tax in case of Pakistan and to analyse its benefits at macro and household level. Two variables were considered in this experiment i.e., imposition of agricultural income tax, and decrease in sales tax rates. The article concludes that the imposition of agricultural income tax is beneficial in terms of household and economy-wide welfare indicators. The results suggest that implementation of agricultural income tax tends to be a real and potential tool to show improvement in country’s economic indicators and household utility at micro level.

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