Charter of the Economy Chapter: 14 CHARTER OF THE ECONOMY: The Financing Plan The current period of great adversity also provides an opportunity. Based first on efforts to avert default, the political leadership must move expeditiously to present a‘ Charter of the Economy ’ to the people of Pakistan. This will not only reduce the risk of large- scale unrest but also lead to the implementation of major structural reforms and to a more equal distribution of income, with a focus on poverty reduction. The rise in poverty has been shown to be one of the largest contributors to the decline in the HSI in recent years after external financial vulnerability. The Prime Minister has once again appealed in his statement recently to the Senate, on the occasion of the Golden Jubilee celebration, for a broad political consensus on the contours of a strong National Economic Action Plan of the type that was launched against terrorism in December 2014. This plan was implemented successfully by the military through Zarb-e­Azb, and the incidents of acts of terrorism substantially reduced. The objective of this Chapter is to highlight the financing plan of the Charter of the Economy . 14.1 Tax Reforms The level of fiscal effort by the Federal and Provincial Governments of Pakistan has consistently been declining, as shown in Table 14.1. Table 14.1: Trend in the Tax-to-GDP Ratio Year Federal% of GDP 2015-16 3377 10.4 2016-17 3647 10.3 2017-18 4065 10.4 2018-19 4071 9.3 2019-20 4334 9.1 2020-21 4764 8.5 2021-22 6142 9.2 2022-23 7200 8.5 Provincial 284 322 401 402 414 508 612 684 % of GDP 0.9 0.9 1.0 0.9 0.9 0.9 0.9 0.8 Total% of GDP 11.3 11.2 11.4 10.2 10.0 9.4 10.1 9.3 111