REVEALED! Pakistan is so poor due to this reason, World Bank shares shocking report, claims poverty rate is high due...

A new World Bank study has raised serious concerns about Pakistan’s tax system, saying that the General Sales Tax (GST) is hurting the poor the most. The report, titled “The Effects of Taxes and Transfers on Inequality and Poverty in Pakistan,” shows that GST takes up more than 7% of a household’s pre-tax spending. This puts a heavier burden on low-income families compared to the rich.

The study says GST is the main reason poverty levels in Pakistan are rising. Unlike income taxes, which are based on how much people earn, GST is applied equally to everyone. This means poor families end up paying a bigger share of their income in taxes. In some cases, they pay more in taxes than they get back in government support.

The report compares GST with the Benazir Income Support Programme (BISP), a monthly cash transfer scheme for the poorest families. It finds that BISP is the most effective government programme for reducing inequality and supporting those in need.

Another major concern highlighted in the study is low investment in education, especially at the pre-primary and primary levels. Poor spending in education has led to big differences in access and quality between rich and poor students, adding to the inequality problem.

The World Bank is urging Pakistan to change its tax policies. It says the current system, which puts a heavy tax load on the poor while the rich often avoid paying their fair share, is both unfair and unsustainable. 

The report supports the long-standing demands of many Pakistani experts and social groups who have called for tax reforms and better targeting of subsidies. Despite these demands, little progress has been made.

The findings come at a crucial time, as Pakistan is in talks with the International Monetary Fund (IMF) for a new loan deal. Reforms in tax collection and better use of social spending are key parts of the IMF’s requirements.