ax rates. A comprehensive review of the income tax system is also to be completed soon, and the recommendations from the review are to be implemented in the 1999/2000 fiscal year. Expenditure and civil service reform Improvements in expenditure policy are to concentrate on maximizing its effectiveness and developmental impact. To achieve this the government is to reduce spending on lower-priority activities by reducing the public investment program, lower spending on personnel, allocate resources toward high-priority and essential operating and maintenance expenditures, provide adequate money for basic social services which are part of the SAPs, and improve the planning and monitoring of budgetary expenditures. Pakistan is currently at the brink of complete collapse. It has got to the point where the army has stepped in and declared martial law and the people are happy about it! This shows how desperate the situation is. For many of the poor and starving, martial law represents their last hope as everyone including their government and international financial institutions has betrayed their trust.The question arises as to what the military can do to alleviate the problems and stem the collapse. The following are some suggestions: a) Until now taxation structure has been a dependent on import related taxes and excise duties. Along with sales and income taxes for mobilizing revenues no matter how poor the enforcement, the speed of imposed tariff reform program effects the capacity of the taxation structure to raise adequate resources to meet operational expenditures. The slowdown of industrial activity has also weighed greatly on this factor. Therefore there is a great need to place a structure which taxes incomes of all sources equally.b) Contrary to popular belief high rates of return on government issued instruments do not necessarily increase savings rates. They, instead, influence the switch from one instrument to the next. This enco...
