IDEAS home Printed from https://ideas.repec.org/a/bpj/ajlecn/v12y2021i1p37-71n1.html
   My bibliography  Save this article

Tax Amnesties in Tax Reform Policy: A Case Study from Pakistan and Lessons for Developing Economies

Author

Listed:
  • Shahryar Bahawal

    (Corporate Tax Office, Federal Board of Revenue, 1st Floor, Post Refund Audit Cell, Corporate Tax Office, Nabha Road, Income Tax House, Lahore, Punjab, Pakistan)

Abstract

An optimally designed tax amnesty scheme can serve as a strategic component in a larger tax reform process. Such a reform can particularly assist in the tax collection efforts of developing economies like Pakistan. Pakistan’s tax amnesty schemes in 2018 and 2019 helped grow the tax base substantially. India’s and Indonesia’s schemes in 2016 also showed promise. My study compares the recent tax amnesties adopted by these three countries (Pakistan, India and Indonesia). Based on these experiences, I propose improvements in the composition of Pakistan’s tax amnesty design. An optimal tax policy cannot rely only on wide-spread enforcement, particularly in countries with large underground economies--like Pakistan, India and Indonesia. Instead, it should focus more on the optimal amnesty design alongside targeted enforcement efforts, aimed especially at documenting and taxing large underground economic activities.

Suggested Citation

  • Shahryar Bahawal, 2021. "Tax Amnesties in Tax Reform Policy: A Case Study from Pakistan and Lessons for Developing Economies," Asian Journal of Law and Economics, De Gruyter, vol. 12(1), pages 37-71, April.
    • Handle: RePEc:bpj:ajlecn:v:12:y:2021:i:1:p:37-71:n:1
    DOI: 10.1515/ajle-2020-0059
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/ajle-2020-0059
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/ajle-2020-0059?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Alm, James & Beck, William, 1993. "Tax Amnesties and Compliance in the Long Run: A Time Series Analysis," National Tax Journal, National Tax Association;National Tax Journal, vol. 46(1), pages 53-60, March.
    2. Inés Macho‐Stadler & Pau Olivella & David Pérez‐Castrillo, 1999. "Tax Amnesties In A Dynamic Model of Tax Evasion," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 1(4), pages 439-463, October.
    3. Muhammad Alishahdani Ibrahim & Rita Myrna & Ira Irawati & J. B. Kristiadi, 2017. "A Systematic Literature Review on Tax Amnesty in 9 Asian Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 220-225.
    4. Herman B. Leonard & Richard J. Zeckhauser, 1987. "Amnesty, Enforcement, and Tax Policy," NBER Chapters, in: Tax Policy and the Economy, Volume 1, pages 55-86, National Bureau of Economic Research, Inc.
    5. Leandro Medina & Mr. Friedrich Schneider, 2018. "Shadow Economies Around the World: What Did We Learn Over the Last 20 Years?," IMF Working Papers 2018/017, International Monetary Fund.
    6. Alm, James & Beck, William, 1993. "Tax Amnesties and Compliance in the Long Run: A Time Series Analysis," National Tax Journal, National Tax Association, vol. 46(1), pages 53-60, March.
    7. Bruno S. Frey & Reto Jegen, 2001. "Motivation Crowding Theory," Journal of Economic Surveys, Wiley Blackwell, vol. 15(5), pages 589-611, December.
    8. Andersson, Jonas & Schroyen, Fred & Torsvik, Gaute, 2019. "The impact of international tax information exchange agreements on the use of tax amnesty: evidence from Norway," Discussion Papers 2019/12, Norwegian School of Economics, Department of Business and Management Science.
    9. Emmiryzan Wasrinil Said, 2017. "Tax Policy in Action: 2016 Tax Amnesty Experience of the Republic of Indonesia," Laws, MDPI, vol. 6(4), pages 1-9, September.
    10. Ahmed Gulzar & Novaira Junaid & Adnan Haider, 2010. "What is Hidden in the Hidden Economy of Pakistan? Size, Causes, Issues, and Implications," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 49(4), pages 665-704.
    11. Ahmed Muhammad Ashfaq, 2019. "Pakistan: Economy under Elites – Tax Amnesty Schemes, 2018," Asian Journal of Law and Economics, De Gruyter, vol. 10(2), pages 1-18, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lars Gläser & Martin Halla, 2008. "Die EU‐Zinsenrichtlinie: Ein Schuss in den Ofen?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 9(1), pages 83-101, February.
    2. Santi Novita & Mienati Somya Lasmana & Nor Azrina Mohd Yusof & Roshidah Safeei & Lee Chai Chuen, 2024. "Trust in Government and Tax Compliance in Indonesia and Malaysia: Do Ethics and Tax Amnesty Matter?," International Journal of Economics and Financial Issues, Econjournals, vol. 14(6), pages 10-22, October.
    3. Bayer, Ralph-C. & Oberhofer, Harald & Winner, Hannes, 2015. "The occurrence of tax amnesties: Theory and evidence," Journal of Public Economics, Elsevier, vol. 125(C), pages 70-82.
    4. Mr. Eric Le Borgne, 2006. "Economic and Political Determinants of Tax Amnesties in the U.S. States," IMF Working Papers 2006/222, International Monetary Fund.
    5. Patricia Gil & Justin E. Holz & John A. List & Andrew Simon & Alejandro Zentner, 2023. "Toward an Understanding of Tax Amnesties: Theory and Evidence from a Natural Field Experiment," NBER Working Papers 31210, National Bureau of Economic Research, Inc.
    6. Bayer, Ralph-C. & Oberhofer, Harald & Winner, Hannes, 2015. "The occurrence of tax amnesties: Theory and evidence," Journal of Public Economics, Elsevier, vol. 125(C), pages 70-82.
    7. Al-Karablieh, Yazan & Koumanakos, Evangelos & Stantcheva, Stefanie, 2021. "Clearing the bar: Improving tax compliance for small firms through target setting," Journal of International Economics, Elsevier, vol. 130(C).
    8. Justin M. Ross & Neal D. Buckwalter, 2013. "Strategic Tax Planning for State Tax Amnesties," Public Finance Review, , vol. 41(3), pages 275-301, May.
    9. Hajawiyah, Ain & Suryarini, Trisni & Kiswanto, & Tarmudji, Tarsis, 2021. "Analysis of a tax amnesty’s effectiveness in Indonesia," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 44(C).
    10. Hari Luitel & Mehmet Tosun, 2014. "A reexamination of state fiscal health and amnesty enactment," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(5), pages 874-893, October.
    11. Fany Inasius & Giri Darijanto & Engelwati Gani & Gatot Soepriyanto, 2020. "Tax Compliance After the Implementation of Tax Amnesty in Indonesia," SAGE Open, , vol. 10(4), pages 21582440209, October.
    12. Koch, Christian & Müller, Cornelius, 2022. "Tax Amnesties and the Insurance Effect: An Experimental Study," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112991, Verein für Socialpolitik / German Economic Association, revised 2022.
    13. Neal D. Buckwalter & Nathan Y. Sharp & Jaron H. Wilde & David A. Wood, 2014. "Are State Tax Amnesty Programs Associated with Financial Reporting Irregularities?," Public Finance Review, , vol. 42(6), pages 774-799, November.
    14. Miguel A. SANCHEZ VILLALBA, 2017. "On the effects of repeated tax amnesties," Journal of Economics and Political Economy, KSP Journals, vol. 4(3), pages 285-301, September.
    15. Langenmayr, Dominika, 2017. "Voluntary disclosure of evaded taxes — Increasing revenue, or increasing incentives to evade?," Journal of Public Economics, Elsevier, vol. 151(C), pages 110-125.
    16. Norman Gemmell & Marisa Ratto, 2018. "The Effects of Penalty Information on Tax Compliance: Evidence from a New Zealand Field Experiment," National Tax Journal, National Tax Association;National Tax Journal, vol. 71(3), pages 547-588, September.
    17. Ahmed, Muhammad Ashfaq & Malik, Ikram Ali & Nawaz, Nasreen, 2022. "Pakistan: Economy Under Elites— Tax Amnesty Scheme, 2019," MPRA Paper 113918, University Library of Munich, Germany.
    18. Javier Moreno & Jaime H. Beltrán & Leovardo Mata, 2019. "Efectos de corto y largo plazo de los programas de condonación de créditos fiscales en la recaudación del Impuesto al Valor Agregado," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 14(1), pages 113-128, Enero-Mar.
    19. Matthew Gould & Matthew D. Rablen, 2020. "Voluntary disclosure schemes for offshore tax evasion," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(4), pages 805-831, August.
    20. Mughal, Khurrum & Schneider, Friedrich, 2018. "Shadow Economy in Pakistan: Its Size and Interaction with Official Economy," MPRA Paper 87087, University Library of Munich, Germany.

    More about this item

    Keywords

    Benami; FBR; policy tool; tax amnesty;
    All these keywords.

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:ajlecn:v:12:y:2021:i:1:p:37-71:n:1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.