Abstract
The tax system in Pakistan is dynamic and intricate, with a fine balance between tax collection and equality being of utmost importance. For sustained growth, a good business environment and an adequate tax-to-GDP ratio are linked. While a lower ratio might encourage investment, it will impede crucial income growth. On the other hand, placing too much emphasis on direct taxation may stifle innovation and foreign investment. Comprehensive tax reform that increases compliance reduces evasion, and broadens the revenue base is the answer. By supporting vital industries like infrastructure, healthcare, and education, this policy helps support a healthy economy. The long-term stability and prosperity of Pakistan depend critically on achieving the proper tax-policy balance.
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