What are the main reasons of low tax revenue in Pakistan?

The results also indicates that the determinants of low tax revenue in Pakistan are narrow tax base, more dependence on agriculture sector, foreign aid and low level of literacy rates.

What causes tax revenue to fall?

The effect of a change in taxation level on total tax revenue depends on the good being investigated, and in particular on its price elasticity of demand. Conversely, for price-elastic goods, an increase in tax rate or duty would lead to a fall in tax revenue.

What are the major issues in Pakistan’s taxation system?

Three major problems with the taxation system in Pakistan have been identified including exemptions, concessions and preferential treatments; tax administration and narrow tax base.

Why is tax revenue low for developing countries?

Tax evasion and avoidance in international trade Another major reason why tax revenue is relatively low in developing countries is that tax is evaded and avoided by multinational companies. While outright tax evasion is illegal, tax avoidance and aggressive tax planning is more of a grey area.

How can I increase my tax collection in Pakistan?

Research shows that incentives – such as performance pay for tax collectors and naming and shaming tax-evading firms – can significantly increase revenue collected. Findings have directly informed policies in Bangladesh and Punjab, Pakistan.

What is tax revenue in India?

According to a finance ministry statement on Tuesday, “The provisional figures for indirect tax collections for the Financial Year 2020-21 show that (post-refunds, pre-devolution) revenue collections are at Rs 10.71 lakh crore compared to Rs 9.54 lakh crore for the financial year 2019-20, thereby registering a growth …

What are the two kinds of tax revenue?

Taxation is the primary source of income for the government. The most important revenue receipts for the government, taxes are involuntary fees levied on individuals and corporations to finance government activities. Revenue receipts can be of two types — non-tax revenue and tax revenue.

What are the issues faced by the Pakistani economy in the tax system?

The problem of taxation in Pakistan has been chronic, being one of the main reasons propelling consistent fiscal deficits over the past. Lower tax morale, tax evasion and high compliance costs have been few major challenges that have constrained FBRs capacity to generate sufficient revenue for the Government.

How can I increase my tax?

Policymakers can directly increase revenues by increasing tax rates, reducing tax breaks, expanding the tax base, improving enforcement, and levying new taxes. They can indirectly increase revenues through policies that increase economic activity, income, and wealth.

What country has best tax system?

Tax Competitiveness Index 2020: Estonia has the world’s best tax system – no corporate income tax, no capital tax, no property transfer taxes. For the seventh year in a row, Estonia has the best tax code in the OECD, according to the freshly published Tax Competitiveness Index 2020.

How can I get more tax?

This leads to a list of eight ways of potentially increasing revenue: more actively and effectively combating the transfer mispricing activities of transnational firms; taxing mining activities better; increasing excise taxes on tobacco and alcohol; reducing tax exemptions for investors; implementing valued added tax ( …

Why are tax revenues so low in Pakistan?

Political instability in Pakistan is one of the main reasons for lower tax revenues [ 15]. During the period of political instability, neither political authorities think for its public nor do they have any concern about the development of their country, so ultimately country faces the problem of lower tax collection.

Is there a tax crisis in Pakistan now?

Pakistan’s taxation crisis. The writer is a former economic adviser to government, and currently heads a macroeconomic consultancy based in Islamabad. THE contours of Pakistan’s taxation crisis are well known by now. Only 0.3pc of the population pays income tax and files a tax return — one of the lowest ratios in the world.

What are the main factors affecting tax collection in Pakistan?

The study empirically demonstrates various factors involved in direct and indirect tax collection in Pakistan. Tax to GDP ratio, corruption, political instability, trade openness, real per capita income and inflation were considered main factors affecting tax collection in empirical testing.

How many people are eligible to pay tax in Pakistan?

Around 7 million Pakistanis are estimated to be eligible to pay income tax, but only less than 0.5 million do. (Of course, millions of Pakistanis pay a small portion as income tax indirectly via deductions made on telecom services, for example.