Empirical Analysis of Tax Revenues and Its Impact on Economic Growth of Pakistan

Abstract

Tax is being considered as the leading source of government revenues in the history of mankind. The same is true for current advanced countries as well as for Pakistan. Government revenues play the leading role in economic growth of every country. In Pakistan Income tax, Sales tax, custom duties, excise duties, worker welfare tax and surcharges etc. are the main sources of tax revenues. This study was conducted to find the relationship between different kinds of taxes and GDP of Pakistan for years 1979-2010 using time series data. Statistical techniques used in analysis include Regression analysis, Unit root test, co-integration test, white test, and so other tests for reliability of the study. The study shows that there is significant positive impact of taxation on economic growth of Pakistan except WWT.

Keywords: Income Tax, Sales Tax, Custom and Excise Duties, Workers Welfare Tax, GDP, Pakistan.