Economic Determinants of Tax Buoyancy in Pakistan: An ARDL Bounds Testing Approach

Abstract

Fiscal policy, being the policy of government expenditures and revenues can play an imperative role in mobilization of resources. Tax revenues determine the capability of an economy to finance government spending but tax situation in many developing countries like Pakistan is very unfortunate. This study explores the economic determinants of tax buoyancy in Pakistan for the period of 1996 to 2016. For this purpose, aggregate and disaggregated analyses of various types of taxes have been conducted using the ARDL bounds test technique. The findings of the study demonstrate that various taxes buoyancies have mixed results with various economic factors.