FISCAL DISCIPLINE IN PAKISTAN: A COMPARATIVE ANALYSIS OF IMPORT TAXES AT A FIXED EXCHANGE RATE FROM 2015 TO 2023.

Dr. Afzal Mahmood; Ms. Rahila Hafiz; Ms. Ra’ana Naseer

doi:10.71146/kjmr561

Authors

Dr. Afzal Mahmood Institute of Management Sciences (Pak-AIMS), Lahore, Pakistan Author
Ms. Rahila Hafiz Institute of Management Sciences (Pak-AIMS), Lahore, Pakistan Author
Ms. Ra’ana Naseer Institute of Management Sciences (Pak-AIMS), Lahore, Pakistan Author

DOI:

https://doi.org/10.71146/kjmr561

Keywords:

Devaluation, Tax Collection, Exchange Rate, Customs Duty Collection JEL Classification, F31 (Devaluation, Exchange Rate), H26 (Tax Collection, Customs Duty Collection)

Abstract

Aims
This study investigates the fiscal discipline in Pakistan by analyzing the performance of import taxes, particularly customs duties, from 2015 to 2023. It aims to evaluate the real growth in customs duty collection by adjusting for exchange rate fluctuations, using 2015 as the base year.

Method
A quantitative approach was employed. The study uses secondary data on customs duty collections and exchange rate movements over the period 2015–2023. By recalculating the customs duty in real terms using the 2015 exchange rate as a constant, the study compares the nominal versus real growth of import tax revenues.

Result
The findings reveal that reported customs duty collections are significantly overstated during periods of exchange rate devaluation. The analysis shows that the percentage difference between reported and real customs duty collections becomes substantial when nominal figures are not adjusted for currency depreciation.

Conclusion
The study concludes that assessing the performance of import tax collection in Pakistan solely based on nominal figures can be misleading. It recommends that policymakers and customs authorities evaluate tax collection performance using real terms adjusted for exchange rate fluctuations to ensure accurate fiscal assessment and planning.