Template-type: ReDIF-Paper 1.0
Author-Name: Robina Ather Ahmed 
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Author-Name: Mark Rider
Author-Email: mrider@gsu.edu
Author-Homepage: http://aysps.gsu.edu/RiderM.html
Author-Workplace-Name: Andrew Young School of Policy Studies, Georgia State University
Author-Workplace-Homepage: http://aysps.gsu.edu/index.html
Title: Pakistan’s Tax Gap: Estimates By Tax Calculation and Methodology
Abstract: This report provides estimates of Pakistan’s tax gap by type of tax and describes the methodologies and data 
used to produce these estimates. A country’s tax gap is the amount of tax that goes uncollected due to non-compliance 
with the tax law. For estimation purposes, the operational definition of the tax gap is the difference between potential 
and actual federal tax revenue, where potential revenue is the amount of tax that the government would collect if everyone 
fully complied with the tax law. It is a simple matter to get actual tax collections by type of tax, so the trick to 
estimating a country’s tax gap is to obtain a reasonably accurate measure of potential tax revenue. Our basic strategy 
is to use micro-simulation models to estimate the potential revenues from Pakistan’s federal taxes of which there are 
only a hand full. Such modeling requires micro-economic data with information about the relevant tax bases and a tax 
calculator to simulate tax liabilities by type of tax. The advantage of this approach is the detailed information that 
it provides on the rate of compliance by type of tax which should be helpful in targeting scarce tax enforcement resources 
and in evaluating tax policy reforms.
Keywords: Pakistan, Pakistan Taxation, tax gap, non-compliance
Length: 78 pages
Creation-Date: 2008-12-01
File-URL: http://icepp.gsu.edu/files/2015/03/ispwp0811.pdf
File-Format:application/pdf
Handle: RePEc:ays:ispwps:paper0811