PROGRESSIVE TAX SYSTEM

This category assess the progressivity of selected taxes and determines what impact they have on income/wealth distribution and inequality. By a progressive tax system we understand such a system that places the biggest burden on those with the greatest ability to pay. It is assumed that direct taxes are generally more progressive than indirect taxes, however, this section also analyzes how countries reduces the burden imposed on the poor through indirect taxes.
  • 2015
  • 2016
2015 UGANDA SENEGAL BANGLADESH PAKISTAN
PROGRESSIVE TAX SYSTEM
7
5
7
6

Uganda's VAT law has been reformed and as a result, a number of exemptions was removed, which is a welcome step towards simplifying the system. However, certain essential goods are now taxes with a regular VAT rate, whereas other, luxurious, goods, enjoy a lower rate, which does not contribute to the progressivity of the tax system. Uganda is also very dependent on the revenues from import and export taxes, which makes it vulnerable to external shocks. 

The personal income tax system underwent a reform that was beneficial mainly for the high income earners as the highest tax rates were lowered, while the lowest were raised. Improvements are also needed regarding the corporate income tax as most revenues are collected from a small number of companies, reflecting a narrow tax base and concentration of the tax burden on a limited number of payers. 

Bangladesh suffers from an extremely inefficient Value Added Tax system with many exemptions and rates. A new VAT and Suplementary duty Act will become effective in July 2016, which gives hopes for improvements. There is a necessity to introduce a reformed wealth tax system that would replace the current surcharge on wealth and that would create proper mechanisms to determine the true value of property and wealth of individuals.

The main challenge Pakistan is facing is a narrow tax base. It needs to be broadened through documentation of the economy and an effective information management system as well as a robust enforcement infrastructure so that the tax evaders are made accountable to pay their due taxes. It is also crucial to lower the burden of indirect taxation on the poor.

0-2
3-4
5-6
7-8
9-10
unfair
fair
    • Personal income tax & wealth taxes
    • Corporate income tax
    • Excise tax
    • Value added tax/sales tax
    • Import and export taxes
    • Presumptive/ turnover taxes
2016 UGANDA SENEGAL BANGLADESH PAKISTAN
PROGRESSIVE TAX SYSTEM
7
5
7
6

Uganda's VAT law has been reformed and as a result, a number of exemptions was removed, which is a welcome step towards simplifying the system. However, certain essential goods are now taxes with a regular VAT rate, whereas other, luxurious, goods, enjoy a lower rate, which does not contribute to the progressivity of the tax system. Uganda is also very dependent on the revenues from import and export taxes, which makes it vulnerable to external shocks.

The personal income tax system underwent a reform that was beneficial mainly for the high income earners as the highest tax rates were lowered, while the lowest were raised. Improvements are also needed regarding the corporate income tax as most revenues are collected from a small number of companies, reflecting a narrow tax base and concentration of the tax burden on a limited number of payers.

Bangladesh suffers from an extremely inefficient Value Added Tax system with many exemptions and rates. A new VAT and Suplementary duty Act will become effective in July 2016, which gives hopes for improvements. There is a necessity to introduce a reformed wealth tax system that would replace the current surcharge on wealth and that would create proper mechanisms to determine the true value of property and wealth of individuals.

The main challenge Pakistan is facing is a narrow tax base. It needs to be broadened through documentation of the economy and an effective information management system as well as a robust enforcement infrastructure so that the tax evaders are made accountable to pay their due taxes. It is also crucial to lower the burden of indirect taxation on the poor.

0-2
3-4
5-6
7-8
9-10
unfair
fair
    • Personal income tax & wealth taxes
    • Corporate income tax
    • Excise tax
    • Value added tax/sales tax
    • Import and export taxes
    • Presumptive/ turnover taxes