Abstract:
Purpose:
This research paper concluded with the objective of analyzing the Impact of taxes on
Economic Growth of Pakistan. In this report we examined the Economic growth through
Gross Domestic Product. We found negative effects of different taxation variables such as
negative effects of Income Tax, negative effects of Sales Tax, negative effects of Corporate
Tax, negative effects of Custom Duty and negative effects of Federal Excise Dutyon real
GDP. Finally, we determined that the current level of taxation in Pakistan necessary to be
revised carefully as this has negative effects on Economic Growth of Pakistan.
Research Methodology:
This research report is based on analyzing the impact of taxation on economic growth of
Pakistan. Established on the research aim and objective, it was observed that quantitative
research technique will be the most suitable for achieving the objectives and answering
research questions. The regression model is used to critically examine the empirical results.
Quantitative research technique enables in collecting a large amount of data in less time. In
conducting a quantitative analysis of the data we used time series data from 1973 to 2017 for
empirical analysis.
Findings of the Research:
In this research study linear regression technique is used to analyze the impact of each
variable of Taxation on the GDP. The research aims to understand the impact of taxation on
economic growth of Pakistan therefore, several hypothesis were created regarding each
variable.
Practical Implication
In order to avoid negative impact of taxation which include all taxes on economy strong
policy recommendations by increasing the tax base, increase the number of tax payers,
effective collection of income tax amount, reducing misrepresentations and phasing out
exemptions, reducing the submission costs and government’s administrative cost, are
important to improve the tax system.
