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Governance: A Source to Increase Tax Revenue in Pakistan

Author

Listed:
  • Muhammad Shahid Hassan
  • Haider Mahmood
  • Muhammad Naveed Tahir
  • Tarek Tawfik Yousef Alkhateeb
  • Ayesha Wajid
  • Dimitri Volchenkov

Abstract

Improved governance in any economy indicates government stability, secured law and order, and minimum internal and external conflicts. A higher level of governance may demonstrate the healthy performance of economic activities and tax revenue collection. Hence, it is vital to investigate the relationship between governance and tax revenue collection in any developing country. Therefore, we aim to investigate the impact of governance on tax revenue in Pakistan using control variables inflation and industrial value-added. The Autoregressive Distributive Lag (ARDL) cointegration technique is utilized to find the long- and short-run effects of hypothesized variables on the tax revenue using a period 1976–2019. After employing a cointegration on the hypothesized model, the results expose that government stability, law and order, and internal and external conflicts leave a positive and significant impact on tax revenue in the long and short run. Hence, it is concluded that governance is an essential source in expanding tax revenue in Pakistan. Moreover, industrial value-added and inflation also show positive effects on the tax revenue. On the grounds of these results, it is proposed that the government should make serious efforts to improve governance and industrial activities for better tax revenue collection.

Suggested Citation

  • Muhammad Shahid Hassan & Haider Mahmood & Muhammad Naveed Tahir & Tarek Tawfik Yousef Alkhateeb & Ayesha Wajid & Dimitri Volchenkov, 2021. "Governance: A Source to Increase Tax Revenue in Pakistan," Complexity, Hindawi, vol. 2021, pages 1-11, April.
    • Handle: RePEc:hin:complx:6663536
    DOI: 10.1155/2021/6663536
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    Citations

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    Cited by:

    1. Zacharia Zabsonre, 2023. "Steuern und Wirtschaftswachstum in der UEMOA [Taxes and economic growth in the WAEMU]," Post-Print hal-04116532, HAL.
    2. Muhammad Shahid Hassan & Amna Kausar & Noman Arshed, 2022. "Investigating Export Determinants: A Time Series Evidence From Canada," SAGE Open, , vol. 12(2), pages 21582440221, June.
    3. Chen, Shengming & Hassan, Muhammad Shahid & Latif, Ayesha & Rafay, Abdul & Mahmood, Haider & Xu, Xiaowei, 2023. "Investigating resource curse/blessing hypothesis: An empirical insights from Luxembourg, the Netherlands, and Portugal economies," Resources Policy, Elsevier, vol. 83(C).
    4. Yu-Ke, Chen & Hassan, Muhammad Shahid & Kalim, Rukhsana & Mahmood, Haider & Arshed, Noman & Salman, Muhammad, 2022. "Testing asymmetric influence of clean and unclean energy for targeting environmental quality in environmentally poor economies," Renewable Energy, Elsevier, vol. 197(C), pages 765-775.
    5. Prianto Budi Saptono & Gustofan Mahmud, 2022. "Institutional environment and tax performance: empirical evidence from developing economies," Public Sector Economics, Institute of Public Finance, vol. 46(2), pages 207-237.
    6. Sasanka Katreddi & Arvind Thiruvengadam, 2021. "Trip Based Modeling of Fuel Consumption in Modern Heavy-Duty Vehicles Using Artificial Intelligence," Energies, MDPI, vol. 14(24), pages 1-12, December.

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