Sales tax ‘largest’ contributor to inequality, poverty: World Bank

A World Bank stu­dy says the General Sales Tax (GST) has the largest marginal contribution to the national poverty increase, while GST payments account for over 7 per cent of households’ pretax expenditure, which leads to further impoverishment among poor and vulnerable households. The Effects of Taxes and Transfers on Inequality and Poverty in Pakis­tan says the GST has the largest ne­­g­ative impact on the poverty headco­unt; the Benazir Income Support Programme has the largest positive impact on inequality reduction. Estimations of the marginal contributions of individual fiscal instruments — or the additional impact that individual fiscal instruments have on poverty or inequality when all other fiscal instruments are included — demonstrate that GST has the largest marginal contribution to the national poverty increase.