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Dimensions of tax burden: a review on OECD countries

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  • Ferdi Celikay

Abstract

Purpose - The tax burden, defined as the ratio of the collected taxes in a particular period against the total product, is commonly used to determine the effect of fiscal and tax policies on the socioeconomic structure. The purpose of this study is to examine how the changes in some macroeconomic indicators affect the tax burden. Design/methodology/approach - System generalized method of moments approach is used for 34 Organisation for Economic Co-operation and Development (OECD) members in the period of 1993-2016. Findings - Based on the research findings, variables such as income per capita, foreign trading volume, the capacity of employment, unemployment and economic share of industry sector effect tax burden in a statistically significant and positive direction. The reason that lies behind the positive effect of unemployment on tax burden is the fact that the sense of social state is not abandoned. Thus, it is predicted that the state will increase public transfer expenditures in the short term due to unemployment, this increase will impose a financial burden on the public sector both in the medium and long term and finally, there will be an increase in the tax burden. Originality/value - Results in the literature suggest that there are many reasons for increasing tax burden such as socio-economic development, financial and organizational structure and the globalization process. However, according to this study, it seems that gross domestic product per capita, the size of the industry sector, openness, employment capacity and unemployment rate also have a positive and significant effect on tax burden in the long run. Ultimately, these results demonstrate that tax burden, one of the most important indicators of the public sector size in the sample of the states and period in hand, is influenced positively by all independent variables and increases slightly but surely. These results suggest that the tax state is still a determinative factor in the socioeconomic field within its taxation tools.

Suggested Citation

  • Ferdi Celikay, 2020. "Dimensions of tax burden: a review on OECD countries," Journal of Economics, Finance and Administrative Science, Emerald Group Publishing Limited, vol. 25(49), pages 27-43, March.
    • Handle: RePEc:eme:jefasp:jefas-12-2018-0138
    DOI: 10.1108/JEFAS-12-2018-0138
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    2. António Afonso & Ana Patricia Montes Caparrós & José M. Domínguez, 2024. "Measuring Tax Burden Efficiency in OECD countries: an International Comparison," Working Papers REM 2024/0339, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    3. Andile Dube & Sylvester Senyo Horvey, 2023. "Institutional quality and renewable energy capital flows in Africa," Future Business Journal, Springer, vol. 9(1), pages 1-16, December.
    4. Jean Damascene Mvunabandi & Bomi Nomala & Ferina Marimuthu, 2024. "The Effect of Tax Avoidance and Tax Evasion on the Performance of South African Economy," International Journal of Economics and Financial Issues, Econjournals, vol. 14(1), pages 52-63, January.
    5. Wu Wanqiu & Noorsakinah Abdul Wahab & Siti Fatimah Abdul Rashid & Norul Syuhada Abu Hassan & Noor Maimun Abdul Wahab, 2024. "Changes in Tax Burden, Solvency, Profitability, Operating Ability and Growing Ability: A Factor Analysis of China International Logistic Companies," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(10), pages 1853-1870, October.

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    More about this item

    Keywords

    Public economics; Taxation; Tax burden; System generalized method of moments approach; OECD countries;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • N16 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Latin America; Caribbean
    • N30 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - General, International, or Comparative
    • N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative
    • N46 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Latin America; Caribbean
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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