IMPACT OF INFLATION ON TAXES IN PAKISTAN: AN EMPIRICAL STUDY OF 2000-2010 PERIOD

Abdul Qadir Patoli (), Tayyab Zarif () and Nadeem A.Syed ()
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Abdul Qadir Patoli: Sindh University Laar Campus Badin
Tayyab Zarif: Newports Institute of Communication and Economics
Nadeem A.Syed: FAST Business School, National University, Karachi Campus

IBT Journal of Business Studies (JBS), 2012, vol. 8, issue 2, 31-41

Abstract: Purpose Aim of this study is to examine the relationship between tax revenue and inflation in Pakistan.It is further measuring the rate of change in a stochastic variable of the taxes, i.e.direct, indirect, and total taxes, with a unit change in inflation in Pakistan with an assumption of other factors remaining constant. Methodology/sample For this research secondary data for the period of 2000 2010 was used.The relationship among the variables is examined at annual effect of same period.The analysis is followed by some statistical tools like correlation, regression and significance test for error factor to test the hypothesis and infer some conclusion. Findings Findings of the study suggest that inflation and taxes are positively correlated and any change in inflation cause taxes to increase in Pakistan.The inflation in the country explains the behavior of taxes positively, but less than 1. Practical implicationsThis study can guide the fiscal policy planners to look at this critical position of taxes which are inflationoriented, rather production or investment oriented.This study also proposes the further study of the relationships of taxes with change in investments and production within the country and also for all fiscal variables in compliance to the change in inflation. Research limitationsThe results are based on secondary data, so the reliability is subject to the accuracy of the source.It also encounters the impact of inflation on taxes, which is not only the factor, so the results are based on assumption that other factors are held constant.

Keywords: Inflation; Direct taxes; Indirect taxes; Total taxes (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:aib:ibtjbs:v:8:y:2012:i:2:p:31-41

DOI: 10.46745/ilma.ibtjbs.2012.82.0

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