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" ASSESSMENT OF INCOME TAX EXPENDITURES ASSESSMENT OF INCOME TAX EXPENDITURES IN PAKISTAN   By Bilal Hassan1   In recent times, tax expenditures have widely been criticized as ineffective and inefficient policy instruments,-lobbying by special interest groups in Pakistan. In this article, the author reviews the economic situation of Pakistan and revisits the structure of income tax law with a focus on income tax expenditures over the period of 2007/08 to 2011/12. After presenting major beneficiaries of tax exemptions, reduced tax rates and reduced tax liability under the income tax code, tax expenditures are discussed from tax policy and economic efficiency point of view. In conclusion, income tax expenditures are proved to be an important contributing factor to lower tax-to-GDP ratio, enhancing tax evasion, promoting horizontal inequalities and causing economic inefficiency in Pakistan and therefore, require to be rationalized, in particular in the wake of increasing budget deficits.   1. Introduction   Pakistan has been facing serious economic problems since 2007/08 as the fiscal deficits are ballooning and the tax revenues as percent of GDP are more or less stagnating. In 2011/12, the fiscal deficit was 8.6%, ever highest since 1960s2. Consequent upon, the State Bank of Pakistan (SBP) has issued warning that this fiscal deficit is not sustainable and can push the country towards a debt trap as the public debt-to-GDP ratio has reached 62.6% in 2011/12.3   Federal tax revenue remains the most important source for the government to balance the budget. However, tax revenue collection fell short of targets every year, lead to higher budget deficit. For instance, against the target of PKR 1951.7 billion for 2011/12, the Federal Board of Revenue…