Eco 402

[Muhammad Naeem]

The impact of tax ... 

The case:

In Pakistan, the trade deficit was observed since 1985 because the value of imports is higher than the value of exports. The International Monetary Fund (IMF) advised that a country should have four months import bill in their total reserves. For the reduction in imports, the Government of Pakistan proposed new sales tax rates on the imported mobile phone in the mini Budget, expressed as:

Sr. No.	Mobile Price (International)	Sales Tax
1	Up to 30 USD	Rs. 150
2	30 USD to 100 USD	Rs. 1470
3	100 USD to 200 USD	Rs. 1870
4	200 USD to 350 USD	Rs. 1930
5	350 USD to 500 USD	Rs. 6000
6	Greater than 500 USD	Rs. 10300

 

                     

Requirement:

In the light of above discussion, logically discuss the benefits and losses of this initiative for the consumers and producers. Use the concepts of demand, supply, and tax for the discussion.

[+ M.Tariq Malik]

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