Depreciation of Pak Rupee and Its Effects on Tax Collection by FBR
Keywords:Rupee Depreciation, Tax Collection, Withholding Taxes, FBR, ARDL Methodology, Pakistan
This research paper is an attempt to analyze the effect of rupee depreciation on total tax col-lection and on types of tax collection. This study employed ARDL methodology on empirical data of Pakistan for the period of 1990 to 2018 and found that depreciation of Pak rupee negatively affects overall tax collection both in short term and long term. Its effect is particularly detrimental in case of income tax and custom duty. In case of income tax it deteriorates tax collection by reducing real income of persons and businesses and in case of customs it reduces tax collection by making imports costly. It is also found that depreciation of currency negatively effects tax collection from agriculture, industry, services and imports whereas it positively effects tax collection from consumption, CPI, remittances and interest rates.
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