Human Security in Pakistan Further, the incidence of taxes in Pakistan is regressive, as shown in Box 14.1. Therefore, it is imperative that a Tax Reform Program is implemented, which not only raises significantly the tax-to-GDP ratio but simultaneously also makes the tax system more progressive. Box 14.1: The Incidence of Taxes in Pakistan The incidence of federal taxes in Pakistan in 2020-21 has been quantified by Pasha[2022]. The tax burden by quintile is given below: Quintile 1(Highest) 2 3 4 5(Lowest) Share of Income Tax 64.0 15.5 7.5 7.4 5.6 Share of Indirect Taxes 42.6 21.3 15.7 11.9 8.5 Share of Total Taxes 49.9 19.1 12.9 10.2 7.9 Share of Income 51.5 19.8 12.8 9.6 6.3 Ratio 0.969 0.964 1.008 1.063 1.254 This leads to the incidence being higher on the lower two income quintiles relative to income by 6% and 25%. The proposed targets are as follows: Table 14.2: Target Tax-to-GDP Ratio Federal Direct Taxes Current* 3.75 Increase 1.50 Target 5.25 Indirect Taxes Current 4.75 Increase 0.50 Target 6.00 Total Taxes Current 8.50 Increase 2.00 Target 10.50 Provincial ­0.75 0.75 0.75 0.25 1.00 0.75 1.00 1.75 Total 3.75 2.25 6.00 5.50 0.75 7.00 9.25 3.00 12.25 Therefore, the target is to increase the national tax-to-GDP ratio by 3% of the GDP from the projected level of 9.25% of the GDP in 2022-23 to 12.25% of the GDP. 112