An analysis of Tax Buoyancy Rates in Pakistan

Abstract

By using econometric techniques for estimating tax elasticities, this paper finds significant but low tax buoyancy rates for GDP, M0 and volume of trade. Surprisingly, the theoretically important factor of tax evasion (SFTR) was found to be ineffective. This indicates that SFTR is not an adequate measure of tax evasion. There is no significant association between tax revenue growth and investment, credit, public debt and inflation. This illustrates the weakness of the tax regime in Pakistan