Reasons of Tax Avoidance and Tax Evasion: Reflections from Pakistan

Abstract

Amount of taxes serves as life blood for government. This paper aims to recognize reasons/causes of tax avoidance and evasion in Pakistan. Relationship between variables of reasons/causes of tax avoidance and evasion are also examined. A questionnaire is developed after reviewing literature to collect responses. Data are analyzed using percentages, arithmetic mean, standard deviation, variance, central limit theorem, cumulative normal distribution calculator, factor analysis, and correlation technique. Results indicate that all variables of reasons/causes of tax avoidance and evasion in Pakistan are correct. Furthermore, there exists a highly significant positive relationship between individual variables of reasons/causes of tax avoidance and evasion in Pakistan at 100% significance level.