Baunsgaard, T., and M. Keen, 2010, “Tax Revenue and (or?) Trade Liberalization,” Journal of Public Economics, Vol. 94, pp. 563–77.
Belinga, V., D. Benedek, R. de Mooji, and J. Norregaard, 2014, “Tax Buoyancy in OECD Countries,” IMF Working Paper, No. 14/110 (Washington: International Monetary Fund).
Fenochietto, R., and C. Pessino, 2013, “Understanding Countries’ Tax Effort,” IMF Working Paper, No. 13/244 (Washington: International Monetary Fund).
International Monetary Fund, 2011, “Revenue Mobilization in Developing Countries,” IMF Policy Paper (Washington: International Monetary Fund).
Prepared by Serhan Cevik (FAD).
Fenochietto and Pessino (2013), estimate tax capacity—the maximum level of tax revenue that a country can collect—and tax effort with a stochastic frontier function, based on a panel of 113 countries, using economic, demographic and institutional characteristics as explanatory variables.
The NTN system covers 3.6 million individuals (or less than 2 percent of population) compared to about 150 million people (or about 80 percent of population) covered in the CNIC database.
To put it in a broader context, there are 15.6 million broadband internet subscribers and over 40 million individual bank accounts in Pakistan. From a cross-country perspective, the share of population filing for income tax in Pakistan is a mere 0.5 percent, compared to over 5 percent in India and 90 percent in Canada.
Expenditure rationalization aiming to change the composition in favor of growth-enhancing social and infrastructure spending is also critical, but beyond the scope of this note.
Services make up over 52 percent of GDP, while industry and agriculture account for about 22 percent and 25 percent, respectively.
Alternative measures of tax efficiency, such as the ratio of the change in tax revenues to the change in tax rates, confirm these trends.
In “benami” transactions, assets are held by or transferred to a person, but have been provided for, or paid by, another person.