An Analysis of The Impact of Tax Amnesty Schemes on Revenue Generation In Pakistan: A Critical Evaluation

Abstract

This study investigated the impact of amnesty schemes on revenue generation in Pakistan from 2000 to 2024. The study utilized a mixed-method approach where the study utilized secondary sources from the Federal Board of Revenue, Ministry of Finance, and State Bank of Pakistan. The authors of the study looked at the number of tax participants, the amount of funds raised through the amnesty schemes, and tax revenues collected as a function of time using a quantitative approach of descriptive statistics, trend analysis, and time-series comparative analysis. The qualitative approach of the study focused on policy documents and government activity notifications to analyze the frameworks in the documents. The study found out that there are tax amnesty schemes that attract a temporary spike in revenue generation; however, schemes do not promote the long-term sustainability of revenue. There are differentiated participation rates on the amnesty schemes; however, the uptake on amnesties was high during financially stable periods. The study amnesty schemes culture on tax compliance and the schemes created a moral hazard for government revenue. There were anomalies on the revenue pre and post the amnesty periods for the country where there was a drop in compliance. The study found that government revenue amnesty schemes do provide relief on the fiscal deficits but at the expense of disregarding the voluntary compliance of the amnesty revenue. The study suggests that for revenue generation in the country to be sustainable, there reforms in the Pakistan tax system by the reducing the number of amnesty schemes, increasing the number of tax audits, and improving tax compliance.