EMPIRICAL ANALYSIS OF THE IMPACT OF MACROECONOMICS VARIABLES ON TAX REVENUE IN PAKISTAN DURING (1995 TO 2024)

Abstract

This study is to investigate how a several of factors, including unemployment, interest rates, inflation, and national saving, affect Pakistan's tax revenue. The World Bank website and Pakistans federal bureau of statistics and Pakistans economic survey and Pakistans state bank all helped with this study. This study looks at Pakistans economy. How different things affect the tax revenue of Pakistan. The study is about Pakistan and what things make a difference, in the tax revenue of Pakistan Secondary data covering the years 1995 to 2024 serve as the basis for this study. Additionally, this paper has the consistent year for all variables. The result show in normality test Most variables have p > 0.05 (e.g., 0.278, 0.370), suggesting normal distribution. Two variables have p < 0.05 (0.000, 0.016), indicating non-normal distribution. And in the stationary test most variables are I(1), meaning they require first differencing to achieve stationary (ADF/PP p < 0.05 after differencing).One variable is I(2), needing second differencing. I have taken into unemployment and the Human Development Index and national income, per capita and inflation and interest rates, total savings, and tax revenue in a more complex multiple regression model. The regression analysis shows, demonstrates how the model's various variables affect tax revenue. The predictor variables total savings, HDI, and interest rates the analysis that variables have significant positive effect on tax revenue and the difference, national income, unemployment, inflation exhibit significant negative impacts on tax revenue. These effects are supported by p-values below the 5% significance level.