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Question Title: 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. TheInternational 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


Up to 30 USD

Rs. 150


30 USD to 100 USD

Rs. 1470


100 USD to 200 USD

Rs. 1870


200 USD to 350 USD

Rs. 1930


350 USD to 500 USD

Rs. 6000


Greater than 500 USD

Rs. 10300






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.


Note: Be specific in your answer. Write to the point in your own words. Avoid irrelevant details.

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