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Stabilising State Budget Revenues Via Indirect Taxation
American Journal of Economics and Business Management,
Vol. 7 No. 11 (2024): November
Abstract
This article investigate the impact of indirect taxation on the stability of state budget revenues, a pressing concern amid global economic uncertainty. Indirect taxes, including value-added tax (VAT) excise duties, and customs tariffs, play a crucial role in sustaining government revenue, particularly during periods of economic downturn or market volatility. This study aims to assess the effectiveness of indirect taxes as reliable revenue sources compared to direct taxes, which are often more sensitive to economic fluctuations. Using a quantitative research approach, this analysis draws on time-series data across multiple economic cycles to evaluate the correlation between indirect tax revenue and fiscal stability in various economic contexts. The results demonstrate that indirect taxes, notably VAT, exhibit a more consistent revenue pattern, contributing significantly to budget resilience. Findings suggest that an increased reliance an VAT and other indirect taxes could mitigate fiscal risks associated with economic instability, thereby enhancing budget stability. These insights underscore the importance of indirect tax reforms and policy adjustments to maximize revenue potential while minimizing the economic burden on lower-income populations. Policy recommendations include diversifying indirect tax bases and refining tax collection processes to optimize state budget stability.
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- Auerbach, A. J., & Hasset, K. (2002). Tax Reform and Growth. The American Economic Review, 92(2), 3-9.
- Bahl, R. W., & Martinez-Vazquez, J. (2006). The Nexus of Tax and Expenditure Policy in Developing Countries. International Tax and Public Finance, 13(4), 453-473.
- Bird, R. M., & Gendron, P. (2007). The VAT in Developing and Transitional Countries. Cambridge University Press.
- Bird, R. M., & Zolt, E. M. (2014). Redistribution via Taxation: The Limited Role of the Personal Income Tax in Developing Countries. Annals of the American Academy of Political and Social Science, 654(1), 181–210.
- Cnossen, S. (1998). Global Trends and Issues in Value Added Taxation. International Tax and Public Finance, 5(4), 399–428.
- Cohen, A. J., & Gantman, E. (2017). The Role of Indirect Taxes in Economic Growth: Evidence from a Panel of Countries. Journal of Economic Surveys, 31(3), 883-909.
- Ebrill, L., Keen, M., Bodin, J., & Summers, V. (2001). The Modern VAT. International Monetary Fund.
- IMF. (2020). World Economic Outlook, October 2020: A Long and Difficult Ascent. International Monetary Fund.
- International Monetary Fund. (2020). World Economic Outlook, October 2020: A Long and Difficult Ascent. International Monetary Fund.
- Keen, M. (2013). Taxation and Development—Again. International Monetary Fund.
- Keen, M., & Lockwood, B. (2010). The Value-Added Tax: Its Causes and Consequences. Journal of Development Economics, 92(2), 138–151.
- Keen, M., & Simone, A. (2004). The Modern VAT: A Guide to VAT Implementation in Developing Countries. IMF Working Paper.
- Musgrave, R. A. (1959). The Theory of Public Finance. McGraw-Hill.
- OECD. (2018). Revenue Statistics 2018. Organisation for Economic Co-operation and Development.
- OECD. (2022). Revenue Statistics 2022. OECD Publishing. https://doi.org/10.1787/9876a82e-en
- Organisation for Economic Co-operation and Development. (2018). Revenue Statistics 2018. OECD Publishing.
- Tait, A. A. (1988). Value-Added Tax: International Practice and Problems. International Monetary Fund.
- Tanzi, V. (1992). Fiscal Policies in Economies in Transition. International Monetary Fund.
- World Bank. (2023). World Development Indicators. https://databankfiles.worldbank.org/public/ddpext/
- Zolt, E. M., & Bird, R. M. (2005). VAT and Cash Flow: A Comparison of Two Tax Systems. International Tax and Public Finance, 12(4), 415-438.
References
Auerbach, A. J., & Hasset, K. (2002). Tax Reform and Growth. The American Economic Review, 92(2), 3-9.
Bahl, R. W., & Martinez-Vazquez, J. (2006). The Nexus of Tax and Expenditure Policy in Developing Countries. International Tax and Public Finance, 13(4), 453-473.
Bird, R. M., & Gendron, P. (2007). The VAT in Developing and Transitional Countries. Cambridge University Press.
Bird, R. M., & Zolt, E. M. (2014). Redistribution via Taxation: The Limited Role of the Personal Income Tax in Developing Countries. Annals of the American Academy of Political and Social Science, 654(1), 181–210.
Cnossen, S. (1998). Global Trends and Issues in Value Added Taxation. International Tax and Public Finance, 5(4), 399–428.
Cohen, A. J., & Gantman, E. (2017). The Role of Indirect Taxes in Economic Growth: Evidence from a Panel of Countries. Journal of Economic Surveys, 31(3), 883-909.
Ebrill, L., Keen, M., Bodin, J., & Summers, V. (2001). The Modern VAT. International Monetary Fund.
IMF. (2020). World Economic Outlook, October 2020: A Long and Difficult Ascent. International Monetary Fund.
International Monetary Fund. (2020). World Economic Outlook, October 2020: A Long and Difficult Ascent. International Monetary Fund.
Keen, M. (2013). Taxation and Development—Again. International Monetary Fund.
Keen, M., & Lockwood, B. (2010). The Value-Added Tax: Its Causes and Consequences. Journal of Development Economics, 92(2), 138–151.
Keen, M., & Simone, A. (2004). The Modern VAT: A Guide to VAT Implementation in Developing Countries. IMF Working Paper.
Musgrave, R. A. (1959). The Theory of Public Finance. McGraw-Hill.
OECD. (2018). Revenue Statistics 2018. Organisation for Economic Co-operation and Development.
OECD. (2022). Revenue Statistics 2022. OECD Publishing. https://doi.org/10.1787/9876a82e-en
Organisation for Economic Co-operation and Development. (2018). Revenue Statistics 2018. OECD Publishing.
Tait, A. A. (1988). Value-Added Tax: International Practice and Problems. International Monetary Fund.
Tanzi, V. (1992). Fiscal Policies in Economies in Transition. International Monetary Fund.
World Bank. (2023). World Development Indicators. https://databankfiles.worldbank.org/public/ddpext/
Zolt, E. M., & Bird, R. M. (2005). VAT and Cash Flow: A Comparison of Two Tax Systems. International Tax and Public Finance, 12(4), 415-438.