Fiscal Dependence on Trade Taxes and Economic Development: A Case Study of Pakistan

Ashfaque H Khan

Public Finance = Finances publiques, 1988, vol. 43, issue 1, 96-112

Abstract: Various authors have provided empirical support for the proposition that there exists an inverse relationship between fiscal dependence on trade taxes and economic development by using cross-country data. This paper empirically tests the same proposition using time-series data for two and a half decades for Pakistan. In a dynamic setting, the author does not find any support for the above proposition. On the contrary, a direct relationship between fiscal dependence on trade taxes and economic development in both aggregate and disaggregate levels is found. The author argues that the direct relationship is the result of the fact that the income elasticity of trade taxes is higher than the income elasticity of total tax revenue.

Date: 1988
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Persistent link: https://EconPapers.repec.org/RePEc:pfi:pubfin:v:43:y:1988:i:1:p:96-112

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