Impact of Tax and Non-Tax Government Revenue on Economic Growth of Pakistan

Abstract

With an emphasis on both tax and non-tax revenue streams over the previous 20 years, this study examines the relationship between government revenue and Pakistan's economic growth. The study investigates the dynamic relationship between revenue generation and real GDP growth using time-series econometric approaches like Granger causality analysis and the Autoregressive Distributed Lag (ARDL) model. According to the results, government revenue—of which tax revenue is more significant than non-tax revenue—has a long-term favorable impact on economic growth. Short-term swings and inefficiencies in revenue collection, however, continue to be problems. In order to maintain growth, the report also emphasizes the significance of tax changes, fiscal restraint, and tax base expansion. For policymakers looking to create revenue plans that promote macroeconomic stability and long-term growth in Pakistan, these findings provide insightful information.