Tax analysis and revenue forecasting issues and techniques. Most of the studies evidenced a negative relationship between economic growth and taxation poulson 2008. Different insights would be gained by tracking revenue relative to population growth or state economic output. Adjusting for inflation is just one way to evaluate state tax revenue growth. This paper investigated empirical evidence on contributions of tax revenue for economic growth of ethiopia using time series data from 1993 to 2012. Is there a causality relationship between local tax revenue.
At the contemporary periods, ethiopiaas economic growth transformed from single to double digit. The structure and financing of a tax change are critical to achieving economic growth. We study the relationships between per capita gdp, overall tax revenue and tax composition in particular direct. Gdp is taken as dependent variable while taxes, exchange rate, life expectancy and trade liberalization as independent variables. Mar 15, 2017 we challenge the oecd view arnold et al. In this set of charts, we aim to frame the financial condition and fiscal outlook of the u. The impact of taxation as an aid to economic development includes abstract and chapter one, complete project material available the impact of taxation as an aid to economic development in edo state a case study of oredo local government area, edo state, nigeria proposal the research work will discuss in detail the impact of taxation as an aid. Decade after recession, tax revenue higher in 45 states. The impact of taxation on economic growth in south africa munich. Tax systems are also used to promote other objectives, such as equity, and to address social and economic concerns. An empirical investigation for greece using causality analysis. As the economist writer implies, economic growth is a major driver of the level of tax revenues. For example, a declining informal sector widens the tax net, the growth of larger. Tax receipts in 29 states had recovered from losses in the downturn by the second quarter of last year, the close of fiscal 2017 for most states, after accounting for inflation.
This graph shows the annual growth rate of tax revenue in china from 2011 to 2019. This report investigates how tax structures can best be designed to support gdp per capita growth. Christopher heady, school of economics, university of kent, keynes college, canterbury, kent ct2 7np, uk. Economic factors driving revenue growth were all positive in the third quarter of 2019. We specifically consider 69 countries with at least 20 years of observations on total tax revenue during the period 1970200921 high. Taxes and economic growth page 2 of 3 tax foundation. In order to attain this objective, relevant timeseries secondary data were collected from the central. Using a framework that in prior research generated significant, negative, and robust. Download the data to see individual state trends from the first.
This paper aims to study the mechanism of how economic growth and tax reform affect total tax revenue and structure over the period 19502011. After checking the stationary of the variables through adf test. Magnifying revenue growth management in cp deloitte us. The impact of economic growth and tax reform on tax revenue. Advocates of tax cuts claim that a reduction in the tax rate will lead to increased economic growth and prosperity. Pdf this study examines the relationship between tax revenues and the rate of economic growth for greece.
Using a framework that in prior research generated significant, negative, and. The tag model estimates the impact tax changes have on wages, jobs, cost of capital, distribution of income, federal revenue, and the overall size of. Are state tax revenues back to normal growth or showing early signs of economic slowdown. Taxation of corporations and their impact on economic. Clearer is the existence of the relationship between tax burden of income tax and vol. Furthermore, discretionary spend across consumer segments hasnt changed significantly over the past two decades, but younger shoppers are disrupting the status quo based on new preferences and new economic pressures. State tax collections grew unusually slowly over the past couple of years, creating budget challenges even for some states whose revenue has rebounded from the great recession. Tax revenue is defined as the revenues collected from taxes on income and profits, social security contributions, taxes levied on goods and services, payroll taxes, taxes on the ownership and transfer of property, and other taxes. The finding of the study indicates that in the long run, there would be a negative relationship between local tax revenue and regional economic growth and a positive and significant relationship between local tax revenue and local retribution revenue. The tax foundations taxes and growth model is a tax scoring model that evaluates the impact taxes have on the economy. On the basis of the introduction of chinas previous main measures in tax reform, this paper uses methods as descriptive statistics, multisegment linear regression model and principal component analysis to analyze how economic growth and tax reform. The relationship between economic growth and tax revenues is a debate that has existed for a long time in the living history. The impact of taxation as an aid to economic development includes abstract and chapter one, complete project material available the impact of taxation as an aid to economic development in edo state a case study of oredo local government area, edo state, nigeria proposal the research work will discuss in detail the impact of taxation as an aid to economic development in edo state.
Apr 02, 2020 this graph shows the annual growth of corporate income tax revenue in china from 2011 to 2019. The most important empirical output, for the 6 investigated easteuropean countries during. The study period spans economic cycles for about 66 percent of the life of. The impact of economic growth and tax reform on tax. Gdp and tax revenuescausality relationship in developing. This study used physical capital, human capital, population growth, tax revenue gdp, personal income tax, corporate income tax, consumption tax and property tax as the variables. This graph shows the annual growth of corporate income tax revenue in china from 2011 to 2019.
Company income tax, valueadded tax, economic growth, national income introduction tax revenue mobilization as a source for financing developmental activities in nigeria has been a different issue primarily because of various forms of resistance, such as evasion, avoidance and other forms of corrupt practices. The impact of the government revenues and expenditures on. This paper examines how changes to the individual income tax affect longterm economic growth. The paper adds marginally to the empirical literature, showing how the two types of tax revenue influence economic growth in eastern europe, under an extended set of economic and sociopolitical control variables. Others claim that if we reduce taxes, almost all of the benefits will go to the rich, as those are the ones who pay the most taxes. We specifically consider 69 countries with at least 20 years of observations on total. Taxation is important mechanism that boosts countryas economic level. The impact and consequences of tax revenues components on. Tax revenue fell in the early 2000s before and after the 2001 bush tax cuts, only to rise again after the 2003 bush tax cut. At this stage, however, there is little agreement about federal reserve board, washington. It suggests a tax and growth ranking of taxes, confirming results from earlier literature but providing a more detailed disaggregation of taxes. The marked reversal in tax revenue shown in the figure did not come disproportionately from any economic group especially the middle class and poor. Apr 29, 2015 the effects of state tax policy on economic growth, entrepreneurship, and employment remain controversial. This study examines the effect of tax revenue on economic growth in ghana using quarterly data for the period 1986 to 2010 within the var framework.
However, growth is more in line with historical averages, mostly because the tcjas impact has waned. This paper investigated empirical evidence on contributions of tax revenue for economic growth of. Many studies argue the relationship between tax policy and the economic growth and how it. The effects of state tax policy on economic growth, entrepreneurship, and employment remain controversial.
Despite slow growth, tax revenue has recovered in 29 states. This document,1 prepared by the staff of the joint committee on taxation, includes an overview of economic growth and the impact that taxes may have on economic growth. The impact of the government revenues and expenditures on the. According to bretschger 2010, he found negative impacts of corporate taxes on openness and total tax revenue to the economic growth in 12 oecd countries. We study the relationships between per capita gdp, overall tax revenue and tax composition in particular direct vs. This paper investigates the impact of taxes tax revenue on economic growth of pakistan by using time series data for the period of 19762011. The study used multiple regressions as tools of analysis. Adbe today reported financial results for its first quarter fiscal year 2020 ended feb.
May 30, 2019 advocates of tax cuts claim that a reduction in the tax rate will lead to increased economic growth and prosperity. For example, a declining informal sector widens the tax net, the growth of. Using the new government revenue dataset grd from the. Total tax revenue as a percentage of gdp indicates the share of a countrys output that is collected by the. Preliminary data for the fourth quarter of 2019 indicate continued growth in overall state tax revenue collections. The standard economic approach to taxation and development focuses on how economic change in. The study focuses on the impact of petroleum profit tax, company income tax, personal income tax, value added tax revenue on nigerias economic growth between 1980 and 20. This paper investigates the relationship between tax structures and economic growth in a panel of developed and developing countries. Revenue growth remains challenging as the widening income gap creates consumer micromarkets with unique strategic needs. The result indicated a unidirectional causality between tax revenue and economic growth and it flows from tax revenue to economic. This paper exists in english only and can be downloaded from the website.
The broad objective of this study is to ascertain the effect of tax revenue on economic development in nigeria. Is there a causality relationship between local tax. Ethiopia is one of the fastest developing countries situated in the northeastern corner of africa. Despite slow growth, tax revenue has recovered in 29. The study found that there exist both short run and long run relationship between economic growth and tax revenue. Tax revenue collection after flat tax reforms 16 1. Identify the effect of tax revenue on labour force lf in nigeria. Evaluate the effect of tax revenue on infant mortality im in nigeria. Size of government and income for eu member states and noneu industrial countries. Dec 22, 2011 the marked reversal in tax revenue shown in the figure did not come disproportionately from any economic group especially the middle class and poor. This paper investigates the design of tax structures to promote economic growth. In order to raise revenue, lowincome countries have historically relied more heavily on international trade taxes, whilst richer nations employ comparatively more consumption and income taxes. Data were sourced from central bank statistical bulletin and extracted through desk. The result indicated a unidirectional causality between tax revenue and economic.
The study examines the effect of tax revenue and economic growth of kenya, from 1980 to 2007. Part i of this document discusses four principal determinants of economic growth that tax policy may be able to influence. We investigate the relation between changes in tax composition and longrun economic growth using a new dataset covering a broad crosssection of countries with different income levels. Tax structure and economic indicators in developing and. Data and research on income taxes including oecd tax databases, taxing wages, revenue statistics, tax policy studies. Tax systems are primarily aimed at financing public expenditures. The study examined the impact of tax revenue on the nigerian economy. Data in the analysis of the impact of the government revenues and expenditures on the economic growth in romania, quarterly data over the period 1998q1 2014q1 is being used.
The tag model estimates the impact tax changes have on wages, jobs, cost of capital, distribution of income, federal revenue, and the overall size of the economy. An empirical case stud y of kenya by esther wairimu gacanja x50761712009 a research paper submitted to the school of economics, university of nairobi in partial fulfillment of requirements for the award of masters of arts degree in economics university ot nairobi library 0472345 8 october, 2012. The study period spans economic cycles for about 66 percent of the life of the country, since attaining political independence in 1960. Corporate taxes are found to be most harmful for growth, followed by personal income taxes, and then consumption. Economic growth drives the level of tax revenue tax. The discussion on the two variables has exhibit contentions from academicians and policy makers with one school holding on the view that taxation is bad for the economy while the other school believe that taxation is good for the economy.
Economic growth drives the level of tax revenue tax foundation. The pgpf chart pack illustrates that budgetmaking involves many competing priorities, limited resources, and complex issues. The choice of the study period provides an opportunity for. Pdf the study examines the effect of tax revenue and economic growth of kenya, from 1980 to 2007. The objective of the study is to examine the effect of tax revenue on economic growth of nigeria and ghana. Using the new government revenue dataset grd from the international centre for tax and development ictd, we consider the effects of revenue neutral changes in tax structure on economic growth for a panel of over 100 countries with data covering the period 19802010.