Estimating the Federal Direct Tax Buoyancy for Pakistan in Post-1973 Era

Salman Ahmed Shaikh ()

MPRA Paper from University Library of Munich, Germany

Abstract: This study used the simple co-integration technique to estimate the direct tax buoyancy for Pakistan economy for the 36 year period starting from FY-1974 to FY-2009. The buoyancy estimated was more than unity which represents slight improvement over previous estimates in past studies. The study attributes the improvement to factors such as expansion of tax base, diversification and deepening of manufacturing sector and structural change in the economy with the size of agriculture sector output shrinking as proportion of GDP and the proportion of direct tax increasing in proportion to total taxes gradually. The study recommends certain policy recommendations which include increase in tax base, reduction in tax rates, reducing tax evasion opportunities by taxing all sources of income and by increasing documentation through compulsory show of tax identity in making most material transactions.

Keywords: Taxes; Fiscal Policy; Public Finance; Tax Buoyancy; Tax Elasticity; Tax to GDP Ratio (search for similar items in EconPapers)
JEL-codes: E62 H2 H3 (search for similar items in EconPapers)
Date: 2012-04-30
New Economics Papers: this item is included in nep-acc, nep-iue, nep-mac and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:42498

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