Optimal tax mix in OECD countries



Year of publication 2016
Type Article in Proceedings
Conference 6th International Scientific Conference TAXES IN THE WORLD
MU Faculty or unit

Faculty of Economics and Administration

Field Economy
Keywords economic growth; direct taxes; indirect taxes; panel regression; tax structure
Description Tax revenues are unparalleled source of income in volume for any government but can also represent significant burden for taxpayers. Therefore to achieve the optimal tax structure should be essential for any policy maker. Aim of this paper is to empirically examine tax structure in OECD countries and how it can affect a long-term economic growth of these countries. The tax structure is measured as a ratio of direct and indirect taxes in this analysis. Fixed-effect panel regression with time effects was used as a method of estimation. Annual data in period 1991-2014 from 34 OECD countries were used and were transformed to 5 year averages. Results however did not show any significant effect of the tax structure on economic growth. The only significant result was a negative relationship between tax quota and GDP per capita growth rate.
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