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

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  • Shaikh, Salman

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.

Suggested Citation

  • Shaikh, Salman, 2012. "Estimating the Federal Direct Tax Buoyancy for Pakistan in Post-1973 Era," MPRA Paper 42498, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:42498
    as

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    References listed on IDEAS

    as
    1. Aisha Ghaus Pasha, 2010. "Can Pakistan Get Out of the Low Tax-to-GDP Trap?," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 15(Special E), pages 171-185, September.
    2. Faiz Bilquees, 2004. "Elasticity and Buoyancy of the Tax System in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 43(1), pages 73-93.
    3. Syeda Fizza Gillani, 1986. "Elasticity and Buoyancy of Federal Taxes in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 25(2), pages 163-174.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Taxes; Fiscal Policy; Public Finance; Tax Buoyancy; Tax Elasticity; Tax to GDP Ratio;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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