State Burden on the Economy

Yegor Gaidar

Voprosy Ekonomiki, 2004, issue 9

Abstract: The question of limits of state burden on the economy is considered in the article. In the countries — leaders of economic growth in XIX century taxation was minimal (approximately 8% of GDP). But during the First World War it sharply increased. The economic crisis of the 1930s expanded scales of intervention of the state in the economy. The fastest growth of taxes was observed during the Second World War and in the post-war period attempts to lower tax burden were not undertaken. State burden on the economy continued to grow up to the end of the 1980's (up to 50% of GDP and more) and modern liberal tendencies could only slow down the growth of taxes. In socialist countries tax burden was traditionally high — close to 50% of GDP, that is the limit for developed countries. In East-European countries it remains at a high level, also due to the necessity to carry out social obligations inherent to EU. In the CIS countries the transformational crisis lasted longer, so tax burden was fixed at lower level. The question of direct influence of state expenditures on rates of economic growth remains unsolved but there are limits of taxation for each level of per capita GDP: when taxes reach them rates of growth slow down.

Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:nos:voprec:y:2004:id:1940

DOI: 10.32609/0042-8736-2004-9-4-24

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