Direct Versus Indirect Taxes: Impact on Economic Growth and Total Tax Revenue

Taufik Abd Hakim

International Journal of Financial Research, 2020, vol. 11, issue 2, 146-153

Abstract: This study investigates the effects and consequences of both direct and indirect taxes on economic growth and total tax revenue in a panel of 51 countries over the period 1992 ¨C 2016. The data were estimated using the dynamic panel generalized method of moments (GMM) estimation. The results indicate that direct taxes are significant and negatively correlated with the economic growth, while indirect taxes seem to have a positive but insignificant impact on the dependent variable. Additionally, this study also found a significant and positive contribution of direct taxes on the total tax revenue compared to indirect taxes. The conclusion is that tax structure based on direct taxes such as taxes on income, profit and capital gains is harmful to the economic growth, yet more efficient in terms of collecting the tax revenue in a country.

Keywords: direct taxes; indirect taxes; economic growth; total tax revenue; dynamic panel GMM estimation (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.sciedu.ca/journal/index.php/ijfr/article/view/16112/10800 (application/pdf)
http://www.sciedu.ca/journal/index.php/ijfr/article/view/16112 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:jfr:ijfr11:v:11:y:2020:i:2:p:146-153

DOI: 10.5430/ijfr.v11n2p146

Access Statistics for this article

International Journal of Financial Research is currently edited by Gina Perry

More articles in International Journal of Financial Research from International Journal of Financial Research, Sciedu Press
Bibliographic data for series maintained by Gina Perry ().