The Relationship Between Economic Growth And Tax Revenue: Bounds Testing

Taxes are one of the most important sources of finance; moreover they are able to have various impacts on chief indicators of economy. However, taxes may have negative as well as positive impacts. The relationship between economic growth and tax revenue in Turkish economy has been studied in this survey. In the survey, the existence of relationship between series and cointegration as well as long and short term links have been studied through ARDL bounds testing and it was observed that series moved together in the long term. In the long term analysis, a relationship between indirect and direct taxes with economic growth has a meaningful and positive relationship. It was found out that direct taxes effect bigger than indirect taxes. In the short term analysis, the coefficient of vector error correction model was signed negative and statistically meaningful. This means that the deviation, which took place in the short term between series which moved together in the long term, has disappeared and series came close to each other. Again, both types of taxes in the analysis of short-term growth is positive and statistically significant influenced, besides in the short term analysis it was observed that indirect taxes effect bigger than direct taxes