Progressive Fiscal Policy for Inclusive Growth By: Dr. Hafiz A Pasha November 2014  F ISCAL P OLICY IS ONE OF THE KEY ELEMENTS ON THE WAY TO ACHIEVE A SOCIALLY JUST , SUSTAINABLE AND DYNAMIC GROWTH MODEL . I T RELATES TO FUNDAMENTAL QUESTIONS DEFINING THE ROLE OF THE STATE IN PROMOTING ECONOMIC DEVELOPMENT AND PROVIDING PUBLIC SERVICES TO ITS CITIZENS .  I N ORDER TO ADDRESS THE EXISTING SOCIAL AND ECONOMIC INEQUALITIES IN P AKISTAN , P ROGRESSIVE F ISCAL P OLICY R EFORMS MUST FOCUS ON DIRECT TAXATION OF LAND , PROPERTY AND INCOME . T HE ALLOCATION OF PUBLIC EXPENDITURE NEEDS TO PRIORITIZE SOCIAL PROTECTION PROGRAMS AS WELL AS SOCIAL SERVICES LIKE EDUCATION AND HEALTH ON THE ONE HAND AND SET INCENTIVES FOR ECONOMIC SECTORS WITH HIGH EMPLOYMENT POTENTIALS ON THE OTHER .  B EYOND THE POLICY CHALLENGES , THIS STUDY ANALYZES THE P OLITICAL E CONOMY OF F ISCAL P OLICY IN THE CURRENT CONTEXT OF P AKISTAN . G IVEN THE PREVAILING POWER STRUCTURES , IT HIGHLIGHTS A NUMBER OF RECOMMENDATIONS HOW TO IMPLEMENT A MORE PROGRESSIVE TAXATION POLICY . B ASED ON EXTENSIVE RESEARCH AND DISCUSSIONS , THE AUTHOR ALSO PROPOSES AN A LTERNATIVE M EDIUM T ERM B UDGET S TRATEGY , BOTH ON THE REVENUE AND EXPENDITURE SIDE .