Effect of the Tax Rate on Economic Growth: A Panel Analysis

Authors

  • Muhammad Taqi School of Economics, Bahauddin Zakariya University, Multan. Pakistan. Author
  • Muhammad Rizwan Lecturer in Economics, Government of Punjab, Higher Education Department (Colleges), Punjab, Pakistan. Author
  • Waqar Ahmad PhD Scholar, IIIE, International Islamic University, Islamabad. Pakistan. Author
  • Muhammad Umair Lecturer, Department of Economics, Emerson University Multan. Author

Keywords:

Taxation, Economic Growth, PMG, Panel Least Square, Granger Causality

Abstract

The tax has a vital role in the economy. All the progress of the country depends upon tax collection and tax policy. This study is to find the impact of tax revenue on the economic growth of the USA, UK, India, and Kenya. The current study explored tax structure is different in developed and developing countries. It clears that developed countries such as the UK and the United States have a powerful, effective, and efficient system for tax collection. A significant source of tax revenue is collected through direct taxes. Moreover, if we compare it with developing countries, developed countries collect more tax revenue, and many individuals pay taxes in developed countries. The PMG ARDL techniques are used to find the objective of the study. The outcome of the study indicates that tax has positive and significant related to economic growth. 

https://doi.org/10.5281/zenodo.10319868

References

Abbas, Q., Khan, A. R., Bashir, A., Alemzero, D. A., Sun, H., Iram, R., & Iqbal, N. (2020). Scaling up renewable energy in Africa: measuring wind energy through econometric approach. Environmental Science and Pollution Research. https://doi.org/10.1007/s11356-020-09596-1

Ali, S. A., Alharthi, M., Hussain, H. I., Rasul, F., Hanif, I., Haider, J., Ullah, S., ur Rahman, S., & Abbas, Q. (2021). A clean technological innovation and eco-efficiency enhancement: A multi-index assessment of sustainable economic and environmental management. Technological Forecasting and Social Change. https://doi.org/10.1016/j.techfore.2021.120573

Amin, A., Liu, X. H., Abbas, Q., Hanif, I., & Vo, X. V. (2021). Globalization, sustainable development, and variation in cost of power plant technologies: A perspective of developing economies. Environmental Science and Pollution Research. https://doi.org/10.1007/s11356-020-10816-x

Anser, M. K., Abbas, Q., Chaudhry, I. S., & Khan, A. (2020). Optimal oil stockpiling, peak oil, and general equilibrium: case study of South Asia (oil importers) and Middle East (oil supplier). Environmental Science and Pollution Research. https://doi.org/10.1007/s11356-020-08419-7

Anser, M. K., Mohsin, M., Abbas, Q., & Chaudhry, I. S. (2020). Assessing the integration of solar power projects: SWOT-based AHP–F-TOPSIS case study of Turkey. Environmental Science and Pollution Research. https://doi.org/10.1007/s11356-020-09092-6

Easterly, W., & Rebelo, S. (1993). Fiscal policy and economic growth. Journal of Monetary Economics, 32(3), 417–458. https://doi.org/10.1016/0304-3932(93)90025-B

Egbunike, F. C., Emudainohwo, O. B., & Gunardi, A. (2018). Tax Revenue and Economic Growth: A Study of Nigeria and Ghana. Signifikan: Jurnal Ilmu Ekonomi, 7(2), 213–220. https://doi.org/10.15408/sjie.v7i2.7341

GOLD, S. D. (1991). CHANGES IN STATE GOVERNMENT FINANCES IN THE 1980s. National Tax Journal, 44(1), 1–19. https://doi.org/10.1086/ntj41788874

Hanif, I., Faraz Raza, S. M., Gago-de-Santos, P., & Abbas, Q. (2019). Fossil fuels, foreign direct investment, and economic growth have triggered CO2 emissions in emerging Asian economies: Some empirical evidence. Energy, 171, 493–501. https://doi.org/10.1016/j.energy.2019.01.011

Huang, Y., Raza, S. M. F., Hanif, I., Alharthi, M., Abbas, Q., & Zain-ul-Abidin, S. (2020). The role of forest resources, mineral resources, and oil extraction in economic progress of developing Asian economies. Resources Policy. https://doi.org/10.1016/j.resourpol.2020.101878

international Monetary Funds. (2018). © International Monetary Fund . Not for Redistribution © International Monetary Fund . Not for Redistribution. 4–32.

Iqbal, N., Khan, A., Gill, A. S., & Abbas, Q. (2020). Nexus between sustainable entrepreneurship and environmental pollution: evidence from developing economy. Environmental Science and Pollution Research. https://doi.org/10.1007/s11356-020-09642-y

Iqbal, W., Fatima, A., Yumei, H., Abbas, Q., & Iram, R. (2020). Oil supply risk and affecting parameters associated with oil supplementation and disruption. Journal of Cleaner Production. https://doi.org/10.1016/j.jclepro.2020.120187

Iram, R., Anser, M. K., Awan, R. U., Ali, A., Abbas, Q., & Chaudhry, I. S. (2020). Prioritization of Renewable Solar Energy To Prevent Energy Insecurity: An Integrated Role. The Singapore Economic Review. https://doi.org/10.1142/s021759082043002x

King, R. G., & Rebelo, S. T. (1988). Business Cycles with Endogenous Growth. 1–37.

Lee, Y., & Gordon, R. H. (2005). Tax structure and economic growth. Journal of Public Economics, 89(5–6), 1027–1043. https://doi.org/10.1016/j.jpubeco.2004.07.002

Li, H. A. O., Bhatti, Z., Abbas, Q., Ahmad, I., Iqbal, N., & Aziz, B. (2020). MEASURING LOW CARBON ENERGY, ECONOMIC and ENVIRONMENTAL SUSTAINABILITY PERFORMANCE of BRICS. Singapore Economic Review. https://doi.org/10.1142/S0217590820500617

Mahdavi, S. (2008). The level and composition of tax revenue in developing countries: Evidence from unbalanced panel data. International Review of Economics and Finance, 17(4), 607–617. https://doi.org/10.1016/j.iref.2008.01.001

Mamatzakis, E. C. (2005). The dynamic responses of growth to tax structure for Greece. Applied Economics Letters, 12(3), 177–180. https://doi.org/10.1080/1350485042000318420

Margalioth, Y. Y. (2005). Tax Competition, Foreign Direct Investments and Growth: Using the Tax System to Promote Developing Countries. SSRN Electronic Journal, 4, 1–50. https://doi.org/10.2139/ssrn.462622

Musgrave, R. A. (2008). Public finance and three branch model. Journal of Economics and Finance, 32(4), 334–339. https://doi.org/10.1007/s12197-008-9044-4

Ojong, C. M., Anthony, O., Oka, &, & Arikpo, F. (2016). The Impact of Tax Revenue on Economic Growth: Evidence from Nigeria. IOSR Journal of Economics and Finance, 7(1), 32–38. https://doi.org/10.9790/5933-07113238

Olaoye, C. O., Ogundipe, A. A., & Oluwadare, O. E. (2019). Tax Revenue and Economic Development in Nigeria. Advances in Social Sciences Research Journal, 6(9), 312–321. https://doi.org/10.14738/assrj.69.7109

Omesi, I., & Nzor, N. P. (2015). Tax Reforms in Nigeria: Case for Value Added Tax (VAT). African Research Review, 9(4), 277. https://doi.org/10.4314/afrrev.v9i4.21

Onakoya, A. B., Afintinni, O. I., & Ogundajo, G. O. (2017). Taxation revenue and economic growth in Africa. Journal of Accounting and Taxation, 9(2), 11–22. https://doi.org/10.5897/jat2016.0236

Ouma, D. O., & NADZANJA*, T. (2019). Fiscal Policy, Governance and Human Development in the Common Market for Eastern and Southern Africa. African Journal of Governance & Development, 8(1), 72–90. https://search.proquest.com/docview/2311128597?accountid=14648

Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approches to analysis of long run relationships. Journal of Applied Econometrics, 16(3), 289–326.

Qayyum, M. A., Bashir, F., Maqbool, M. M., Ali, A., Bashir, S., & Abbas, Q. (2019). Implications of saline water irrigation for linseed on seed germination, seedling survival and growth potential. Sarhad Journal of Agriculture. https://doi.org/10.17582/JOURNAL.SJA/2019/35.4.1289.1297

Sahban, M. A., & Abbas, Q. (2018). Comparison of Conflict Management Style Between Malaysian and Thai Employees: A Case Study in Top Glove Corporation. Journal of Business and Social Review in Emerging Economies. https://doi.org/10.26710/jbsee.v4i2.244

Skinner, J. (1988). Taxation and Output Growth in Africa. Policy, Planning and Research Working Paper. Washington, D.C.: The World Bank, 73. https://core.ac.uk/download/pdf/6373269.pdf

Sun, H., Khan, A. R., Bashir, A., Alemzero, D. A., Abbas, Q., & Abudu, H. (2020). Energy insecurity, pollution mitigation, and renewable energy integration: prospective of wind energy in Ghana. Environmental Science and Pollution Research. https://doi.org/10.1007/s11356-020-09709-w

Yang, Z., Abbas, Q., Hanif, I., Alharthi, M., Taghizadeh-Hesary, F., Aziz, B., & Mohsin, M. (2021). Short- and long-run influence of energy utilization and economic growth on carbon discharge in emerging SREB economies. Renewable Energy. https://doi.org/10.1016/j.renene.2020.10.141

Downloads

Published

2021-09-30

How to Cite

Effect of the Tax Rate on Economic Growth: A Panel Analysis. (2021). International Research Journal of Management and Social Sciences, 2(2), 12-26. https://irjmss.com/index.php/irjmss/article/view/125

Similar Articles

1-10 of 64

You may also start an advanced similarity search for this article.