Team Details:

Principal Investigator
Dr. Imran Qaiser
Assistant Professor (Economics)
Government College University Faisalabad

Co-PI
Sahrish Saeed
Freelancer
Government College University Faisalabad

Project Brief:

Pakistan faces significant economic challenges, including a high current account deficit, fiscal deficit, and elevated levels of public debt. These issues contribute to volatile exchange rates and economic uncertainty. A considerable portion of the country’s tax revenue is directed toward debt servicing, limiting its ability to invest in development projects. Additionally, Pakistan’s tax filing ratio is alarmingly low, resulting in a persistently low tax-to-GDP ratio. As a result, the country is under pressure from the International Monetary Fund (IMF) to increase tax revenue and expand the tax base, while the business community advocates for reduced tax burdens. This study examines the factors contributing to low tax compliance using both qualitative and quantitative data obtained from surveys of traders, tax consultants, and tax officials.

Public Policy Relevance:

The findings of this study offer crucial insights for public policy by identifying key factors that lead to non-compliance among traders. It supports evidence-based reforms aimed at expanding the tax base, improving voluntary compliance, and enhancing the effectiveness of initiatives like the Tajir Dost Scheme (TDS). The research also addresses challenges in implementation across various tax regimes, such as general sales tax, advance tax, and presumptive or fixed tax. By examining barriers to tax compliance at the micro level, this study aims to simplify and make the tax system more transparent. Such measures could reduce unintentional evasion and encourage greater compliance in Pakistan. Additionally, this research will provide policymakers with valuable insights regarding tax simplification procedures, legal and illegal tax evasion, optimal tax rates, targeted audits, and the role of digitization in formulating effective policies against tax evasion.