The Determinants of Tax Revenues: Empirical Evidence From Jordan

Abstract

The purpose of this study is to identify the determinants of tax revenues (TXR) in Jordan. The study covered the period (1990-2019) and used ARDL Bound test for co-integration, ARDL Long Run form, and ARDL Error Correction regression to examine the study hypotheses. The results of the bound test and co-integration equation (CointEq1) shows that there exists a long run relationship between (INDUST, LPCI, FD, FAID, GE, OPEN) and (TXR) in Jordan. The analysis results revealed that per capita GDP, fiscal deficit and government expenditure have a positive significant impact on tax revenues in the short run and long run. While, Foreign aids has a negative significant impact on tax revenues. Industrial sector Value added and economic openness have a positive significant impact in the short run while having a positive insignificant impact on tax revenues in the long run. The results explore that per capita GDP, fiscal deficit, foreign aids and government expenditure are good determinants for tax revenues in the short run as well as in the long run, while industrial sector value added and economic openness are good determinants in the short run. The findings suggest a reduction in government expenditure due to the upward trend in the fiscal deficit and public debt, and the continued increase in (GE) leading to more internal and external imbalances.

Determinants of Tax Revenues in the Arab Countries

“…The results showed that there is a statistically significant direct effect at the level of significance of 10% of the real GDP per capita on tax revenues, as an increase in the per capita real GDP by one unit leads to an increase in tax revenues by (0.001) units with constant factors. this is consistent with the study of each of (Castro, 2014;Gustofan, 2021;Teref, 2018;Alqudah, 2021;Tujo, 2021). The null hypothesis was rejected, which states that "there is no statistically significant effect of real GDP per capita on tax revenues at the significance level (α≤0.10).…”

“…Unit, ceteris paribus. This is consistent with the study of each of (Teref, 2018;Alqudah, 2021) and contradicts the study of each of (Castro, 2014;Tujo, 2021). The null hypothesis was rejected, which states, "There is no statistically significant effect of the added value of the agricultural sector on tax revenues at the level of significance (α≤0.05).…”

“…The study model formulated based on previous studies as a study (Castro, 2014;Teref, 2018;Alqudah, 2021) in order to clarify the determinants of tax revenues in the Arab countries (Jordan, Egypt, Lebanon) during the period 2000-2021 through the following econometric model: TRit= f (PCIit, INDit, AGRit)……………(1) The linear form of the model as follows: 𝑇𝑅 𝑖𝑡 = 𝛼 0 + 𝛼 1 𝑃𝐶𝐼 𝑖𝑡 + 𝛼 2 𝐼𝑁𝐷 𝑖𝑡 + 𝛼 3 𝐴𝐺𝑅 𝑖𝑡 + 𝑈 𝑡 ………(2) where: TRit: tax revenue to the GDP of the country i over the time period t . PCIit: real GDP per capita for country i over time period t .…”

The Nexus between Degree of Commercialization, Trade Openness and Tax Revenue Performance in Tanzania

“…It aids the government in stabilization of national economy, the allocation of money, and the distribution of income and wealth among the people (Al-Qudah, 2021, Amirthalingam, 2020. Tax income supports citizens through providing social services such as schools, hospitals, roads, housing, and transportation, in addition to being a key source of revenue for the government (Hasan et al, 2023).…”

“…Developed countries collect higher tax revenue because they employ their tax bases more effectively (Sharma, 2015). In impoverished countries, they collect an average of 16.5% (Al-Qudah, 2021). The average tax income to GDP ratio in SSA nations is less than the UN's (UN) 20% objective for funding social and economic activities (Amirthalingam, 2020).…”