Unveiling the Enigma of Tax Evasion: A Pakistani Perspective

The current study aimed to unravel the factors that influence tax evasion behaviors among different income groups in Pakistan. The study used a robust multiple regression analysis to examine the complex phenomena of tax evasion and its compliance determinants. Furthermore, it also shed light on the complex relationship of economic, cognitive, and systemic factors. This study analyzed the data of 553 respondents collected through a structured questionnaire to explore the interplay between complexity, fairness perceptions, financial literacy, and access to financial services in the tax evasion context of Pakistan. Findings showed that low-income people in Pakistan are more vulnerable to tax evasion as well as they are more likely to be non-compliant than the high-income group. Additionally, the findings have significant implications for policymakers, providing a roadmap to increase tax compliance by simplifying tax regulations, promoting fairness, and investing in financial literacy programs. Such literacy would be helpful to improve fiscal health, increase voluntary compliance, and strengthen the economic and social development in the country. The current study provided actionable strategies to tackle tax evasion, leading to a more transparent and prosperous tax environment in Pakistan.