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Macroeconomic Environment and Taxes Revenues in Pakistan: An Application of ARDL Approach

Author

Listed:
  • Amjad Ali

    (Department of Economics, University of the Punjab, Lahore. Pakistan)

  • Marc Audi

    (AZM University Business Faculty, Centre d’Economie de la Sorbonne Universite Paris 1; Paris-France)

Abstract

Taxation intends to raise the necessary funds for government expenditures, redistribution of income and stabilization of the economy, influence the allocation of resources and to overcome the externalities. Taxation is also supportive of the process of stable economic growth. This study has examined the impact of macroeconomic situations on tax revenues in the case of Pakistan over the period of 1975 to 2016. The study has very interesting results as unemployment has a positive and significant impact on tax revenues. There is a positive and significant relationship between money supply tax revenues. Inflation has negative and significant relation with tax revenues in the case of Pakistan. The study shows that Pakistan needs a sound macroeconomic environment for enhancing tax revenues. A country with stable macroeconomic situations would create greater opportunities for investment and more jobs are created. This would further enhance purchasing power on the part of consumers and bearing taxes burden become easy for them. Moreover, there is a dire need of tax education to the masses.

Suggested Citation

  • Amjad Ali & Marc Audi, 2018. "Macroeconomic Environment and Taxes Revenues in Pakistan: An Application of ARDL Approach," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 7(1), pages 30-39, March.
    • Handle: RePEc:rfh:bbejor:v:7:y:2018:i:1:p:30-39
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    References listed on IDEAS

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    More about this item

    Keywords

    taxes; inflation; unemployment;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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