The Impact Of Taxing System On Social And Economic Performance: An Empirical Analysis In Pakistan.

Abstract

This paper examines the relationship between various dimensions of the taxing system and its subsequent effects on both social and economic performance in Pakistan. Drawing upon extant literature that emphasizes the role of tax fairness, tax knowledge, enforcement level, social exchange, tax education, and taxpayer attitudes, this study explores how these dimensions influence tax morality, perceptions of tax evasion, and ultimately, financial wellbeing. Using a quantitative, crosssectional design and data collected via a structured questionnaire from 250 respondents in selected Pakistani firms, the study employs SPSS for descriptive analysis, reliability testing, correlation, and regression analysis. Results indicate that perceptions of tax fairness and tax knowledge are significantly associated with positive attitudes toward tax morality. In turn, these attitudes influence perceptions on tax evasion, which correlate strongly with financial wellbeing. Improved financial wellbeing is found to be a significant predictor of enhanced economic and social performance. The findings suggest that a well-designed, transparent, and fair tax system—coupled with effective enforcement and comprehensive tax education—can foster greater compliance and positively impact overall socioeconomic performance. Implications for policymakers include the need for targeted reforms that enhance the public’s understanding of tax policies and promote ethical tax behavior.