The main objective of this study was to check the effect of tax evasion on tax in Pakistan for the period of 1980-2014. Total Tax is taken as dependent variable and Export, Tax evasion and GDP are taken as independent variables in this study. Data was taken from World development Indicators (WDI), Handbook of Statistics and International Financial Statistics (IFS). ADF test was used to check the integrated order of the variables. Johansen Co-integration and error correction models were used to find out the long run and short run relationship among the variables. The empirical results showed that there is a statistically significant long-run negative relationship between total tax and tax evasion (illegal money) in Pakistan.
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