Overview

• The World Bank identifies Pakistan's General Sales Tax (GST) as the largest contributor to rising poverty, consuming over 7% of household pre-tax spending for low-income families.
• Poor households in Pakistan are net payers into the fiscal system, paying more in taxes than they receive in benefits, further exacerbating financial hardship.
• The Benazir Income Support Programme (BISP) is praised for being the most effective tool in reducing inequality through targeted cash transfers to the poorest families.
• The report recommends rebalancing the tax system towards progressive direct taxation and phasing out regressive subsidies that benefit wealthier groups.
• Improving public spending efficiency, particularly in education and healthcare, and expanding social protection programs are key recommendations to reduce inequality and poverty.