Organisation for economic cooperation and development. The purpose of the study is to identify the role of tax in economic growth. Jorgenson, harvard university and kunyoung yun, yonsei university april 2, 2012 acknowledgements. From 2024 to 2029, economic growth and potential growth are projected to average 1. Economic growth drives the level of tax revenue tax. This study examines the effect of tax revenue on economic growth in nigeria, utilizing time series data for the period spanning from 1970 to 2011. 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. This paper examines how changes to the individual income tax affect longterm economic growth. We specifically consider 69 countries with at least 20 years of observations on total tax revenue during the period 1970200921 high.
The case of eu countries baranova veronika, janickova lenka abstract one of the most debated questions in economy is the relationship between tax rates and economic growth. Introduction the effects of statelevel tax policy on states economic growth and on related activity such as entrepreneurship and employment have proven to be both perennial and controversial. 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. The choice of the study period provides an opportunity for. The relationship between tax revenue and economic growth of hebei province based on the tax multiplier effect. Tax systems are also used to promote other objectives, such as equity, and to address social and economic concerns. The conference boards index of consumer confidence rose from 129. Economic outlook following healthy growth in 2018, momentum in the u. Explicit modelling of the individual decisions that contribute to growth allows the analysis of tax incidence and the prediction of growth effects. Economic growth group inc 501c3 nonprofit richmond, in. They are designed with economic growth in mind, consistent with the literature on the economic effects of different tax types and structures. Measures of tax burden in arizona since fiscal year 1970 16 5.
Pdf the effects of tax revenue on economic growth in. More hotel guests means more spending in local communities, including stores, restaurants, and attractions. Tax systems are primarily aimed at financing public expenditures. As the economist writer implies, economic growth is a major driver of the level of tax revenues.
Taxation, efficiency, and economic growth by dale w. Pdf this study examines the relationship between tax revenues and the rate of economic growth for greece. Associate director, center for competitiveness and prosperity research. According to karran 1985 the tax revenue raised by the government depends to a large extent on the state of the economy. Economists seem to back off growth claim for tax cuts bloomberg. 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. Alongside its goals of sustaining economic growth amid fair competition and social justice, and achieving the national development objectives and the sustainable development goals, cambodia has developed a new revenue mobilization strategy for 20192023 to further improve its revenue administration and tax collection sustainability.
Instead, economic growth is often the key driver of tax revenues. Both the expectations and current conditions components contributed to the increase. For an overview of the broader issues of these relationships see crs report r42111, tax rates and economic growth, by jane g. Ho1 tax revenue has no significant positive impact on economic development of nigeria using hdi. Taxation and economic growth in latin america publications idb. A report from the office of the university economist. Improvements in average weighted ratios of tax revenue to gdp in 22 african countries between 20002004 and 20142018 53 table 3. Economic growth is the growth of an economys output of goods and services which is sometimes reffered to as the gross national. 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. If the inline pdf is not rendering correctly, you can download the pdf file here. For the first time in decades, low and middleincome workers would share in economic gains even if the factors suppressing market wages do not reverse. Myles abstract the development of endogenous growth theory has opened an avenue through which the effects of taxation on economic growth can be explored. This paper was prepared for the handbook of computable general equilibrium modeling, edited by peter b. Economic theory assumes that the relationship between indirect taxation and economic growth is negative, for example mendoza et al.
Economists seem to back off growth claim for tax cuts. After 2019, annual economic growth is projected to slow furtherto an average of 1. In addition, federal policymakers often enact temporary tax relief packages during downturns, for example, the 2001 and 2008 tax rebates. At this stage, however, there is little agreement about federal reserve board, washington. The structure and financing of a tax change are critical to achieving economic growth. On the revenue side, the federal tax base, formed primarily by individual incomes and corporate profits, and in turn tax revenue automatically grow faster in economic expansions than in recessions. Data and research on income taxes including oecd tax databases, taxing wages, revenue statistics, tax policy studies. If you want to raise more tax revenue, raise tax rates. Department of accounting and finance faculty of management sciences, lagos state university, lagos, nigeria eaddress.
The council of economic advisers october 2017 september 29, 2017 the growth effects of corporate tax reform and implications for wages. 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. Yet, in practice, it is hard to completely separate the analysis of the overall tax burden from that of tax structure. If you dont want to lose revenue, dont cut tax rates.
Especially taxation of corporations has great importance because a corporate tax. A form 990 is an information return filed with the irs that shows extensive details on a nonprofit organizations. 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. However, using economic projections from a variety of sources, we find that. The study period spans economic cycles for about 66 percent of the life of. Yet african countries continue to experience low tax revenue, hence declining economic growth. Taxation r evenue, economic growth, johans en cointegration test, fixed and ra ndom eff ect, panel data. Dec 01, 2017 a group of conservative economists appears to be backing off their claim that congresss proposed corporate tax cut would lead to 3 percent economic growth within a decade. The maximum credit would be indexed to economic growth. Tax burden as a percentage of income, state and local governments 11 4.
Effects of income tax changes on economic growth brookings. The relationship between taxes and growth at the state level 921 does not change the results for tax revenues noted above, and generally the tax rate variables do not affect growth. Dependency theorists argue that sometimes lowincome earning countries shown evidence of economic growth with. The economic effects of capital gains taxation a joint economic committee study chairman jim saxton joint economic committee united states congress june 1997 abstract there is broad recognition that the current tax system is systematically biased against saving, investment, and work effort. The top marginal tax rate on labor is higher in the u. As our economy shifts, our tax system fails to keep pace with economic growth. The idea that taxes affect economic growth has become politically contentious and the subject of much debate in the press and among advocacy groups.
The study period spans economic cycles for about 66 percent of the life of the country, since attaining political independence in 1960. In january 2003 president bush approved the jobs and growth tax relief reconciliation act of 2003, substantially cutting taxes on business income. People often think of tax revenue as a function of tax rates. Tax analysis and revenue forecasting issues and techniques.
The effect of tax revenue on the economic development of nigeria is not significantly different from its impact on economic growth using gdp as a measure. Taxation of corporations and their impact on economic growth. Bush signed the economic growth and tax relief and reconciliation act into law, initiating a multiyear program of reductions in taxes on individual income. Employer identification number ein tax id nine digit number assigned by the irs to identify a company.
One form of bias is the multiple taxation of saving. This report investigates how tax structures can best be designed to support gdp per capita growth. Taxation of corporations and their impact on economic. Colorado legislative council staff june 2019 economic.
To identify the impact of income tax on gdp per capita and fdi rate. The study applied the concepts of elasticity and buoyancy to examine the relationship between tax revenue and economic growth in kenya for the period 2002 to 2012. Pdf the relationship between tax revenue and economic. Tax evasion and economic growth in selected african countries, 19852010 william bekoe4 abstract major tax reforms were undertaken in the 1980s with the aim of enhancing revenue mobilisation and laying the foundation for sustained economic growth. The impact of tax revenue on nigerian economy case of federal board of inland revenue matthew a. Estimate of annual change in ongoing tax revenue due to statutory changes, arizona state government general fund 19 6. The unauthorized commercial use of bank documents is prohibited and may be. Trends in tax revenue by tax type and component, 20002018 per cent of gdp 55. Tax revenue mobilization as a source for financing development activities in nigeria has been a. Taxation and the sustainable development goals do good things come to those who tax more. Thank you for the chance to discuss the effect of tax increases and spending cuts on economic.
Cathal long and mark miller april 2017 key messages linking the delivery of the sustainable development goals to an increase in domestic resource mobilisation is a good idea in principle. Part i of this document discusses four principal determinants of economic growth that tax policy may be able to influence. Economic growth drives the level of tax revenue tax foundation. 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. Tax as we know is a main source of government revenue and the collection of the tax will be used by government for development purposes. Clearer is the existence of the relationship between tax burden of income tax and vol. Hence, the collection of data for the database and its computerization are prerequisite conditions for the establishment of an efficient revenue collection and monitoring system.
Document complet disponible sur olis dans son format dorigine. A revenue neutral growthoriented tax reform would, therefore, be to shift. Corporate tax rate is the average combined central and subcentral corporate tax rate for 20122016. A dedicated, broadbased, valueadded tax vat of 11 percent would finance the new credit. Data is analyzed to illustrate the association between the tax rates of the highest income taxpayers and measures of economic growth. Pdf tax revenue is frequently considered as an alternative form of sustainable financing within a stable and predictable fiscal environment to. The nexus between government revenue and economic growth in. Are state tax revenues back to normal growth or showing early signs of economic slowdown. The impact and consequences of tax revenues components on. The objective of this study was to analyze the relationship between tax revenue and economic growth in kenya for the period 2002 to 2012.
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