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The Relationship Between Direct Taxes and Economic Growth in Oecd Countries

Author

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  • Đurović-Todorović Jadranka

    (University of Niš, Faculty of Economics, Republic of Serbia)

  • Milenković Ivan

    (University of Novi Sad, Faculty of Economics Subotica, Republic of Serbia)

  • Kalaš Branimir

    (University of Novi Sad, Faculty of Economics Subotica, Republic of Serbia)

Abstract

The aim of the paper is to identify a potential linear correlation between direct taxes and economic growth. The subject of the paper includes estimating the level and intensity of correlation between direct taxes and economic growth in OECD countries for the period 1996-2016. The study analyses tax forms such as personal income tax, corporate income tax and tax on property, and their potential relationship with economic growth, measured by GDP growth rate. Also, tax revenues growth has been included to determine whether it directly affects the economic growth in observed countries. The results of the group correlation matrix have shown that there is a statistically significant relationship between tax revenues growth, personal income tax, corporate income tax and gross domestic product in OECD countries. However, it is important to note that tax on property and gross domestic product are not significantly correlated at the OECD level, which is logical given the low share of this tax in those countries.

Suggested Citation

  • Đurović-Todorović Jadranka & Milenković Ivan & Kalaš Branimir, 2019. "The Relationship Between Direct Taxes and Economic Growth in Oecd Countries," Economic Themes, Sciendo, vol. 57(3), pages 273-286, September.
    • Handle: RePEc:vrs:ecothe:v:57:y:2019:i:3:p:273-286:n:2
    DOI: 10.2478/ethemes-2019-0016
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    References listed on IDEAS

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    More about this item

    Keywords

    direct taxes; economic growth; correlation; OECD countries;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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