Fiscal Space
Expansion

Expanding fiscal space to provide more money for development

SEED aims to support Government of Khyber Pakhtunkhwa in generating greater public investment which in turn depends on checking the unabated growth in government’s expenditure and optimizing revenue mobilization. SEED is supporting GoKP in multiple areas including design and roll out of meaningful pensions reforms that rationalize the GoKP’s current and future liabilities, tapping into the potential STS tax base and conducting a communications and advocacy campaign, technical support on better enforcement of MVT collection through modernization of systems, establishing a Tax Policy Nudge Unit that will use behavioral science insights to increase compliance by raising tax morale and willingness-to-pay among taxpayers, and design of legal and institutional reforms and policies required to establish a tangible link between local revenue and expenditure through a pilot project on benefit taxation with a possible RCT.

Key Interventions

SEED is providing technical assistance to Finance Department, GoKP, Excise, Taxation and Narcotics Control Department (ETNCD) and Khyber Pakhtunkhwa Revenue Authority (KPRA) in structuring and rolling-out meaningful policy reforms including pension reforms, streamlining filing and registration of Sales Tax on Services (STS), better enforcement of Motor Vehicle Tax collection throughmodernization of systems and revamping of license number plates.

The programme is introducing Qatar’s B4Development Foundation to GoKP to set up and operationalize a Tax Policy Nudge Unit as a contemporary intervention to revamp tax landscape in KP. Nudge Unit will use behavioural science insights to increase compliance by raising tax morale and willingness-to-pay among taxpayers for Sale Tax, MVT and UIPT.

As part of its assistance to GoKP, SEED is formulating Post COVID Economic Stimulus Package and undertaking Cost Benchmarking for public sector inputs on annual development plans to assess possible options for reducing expenditure through outsourcing and/or other models.

Sponsors & Stakeholders

SEED is funded by United Kingdom’s Foreign, Commonwealth and Development Office (FCDO), and implemented by Adam Smith International Pakistan in partnership with  Government of Khyber Pakhtunkhwa.