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Federal Tax Revenue Forecasting of Pakistan: Alternative Approaches

Author

Listed:
  • Syeda Um Ul Baneen

    (Pakistan Institute of Development Economics, Islamabad)

Abstract
Every year, there are forecasting errors in Pakistan’s federal tax revenues. From 1970 to 2020, the federal government has significant forecast errors for all types of tax revenues. Using 1970-2014 data, two-thirds of the time, total federal taxes were overestimated by more than five percent (Qasim & Khalid, 2016). Errors in tax revenue forecasts directly affect budget formulation. The consequences of such errors are misleading tax revenue targets leading to wrong allocation of resources resulting in arbitrary cuts at the end of fiscal year such as a cut in development expenditures and/or an increase in the unanticipated debt burden. This, from policy perspectives, have long-run monetary and fiscal effects.

Suggested Citation

  • Syeda Um Ul Baneen, 2023. "Federal Tax Revenue Forecasting of Pakistan: Alternative Approaches," PIDE-Working Papers 2023:12, Pakistan Institute of Development Economics.
    • Handle: RePEc:pid:wpaper:2023:12
    as

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    File URL: https://file.pide.org.pk/pdfpideresearch/wp-23-12-federal-tax-revenue-forecasting-of-pakistan-alternative-approaches.pdf
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    References listed on IDEAS

    as
    1. Michael Safo OFORI & Abel FUMEY & Edward NKETIAH-AMPONSAH, 2020. "Forecasting Value Added Tax Revenue in Ghana," Journal of Economics and Financial Analysis, Tripal Publishing House, vol. 4(2), pages 63-99.
    2. Ondřej Bayer, 2013. "Research of Estimates of Tax Revenue: An Overview," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2013(3), pages 59-73.
    3. Glenn Jenkins & CHUN-YAN KUO & GANGADHAR SHUKLA, 2000. "Tax Analysis and Revenue Forecasting," Development Discussion Papers 2000-05, JDI Executive Programs.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Buoyancy Approach; LASSO; Marginal Tax Rate; Tax Revenue Forecasting;
    All these keywords.

    JEL classification:

    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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