Impacts of tax on economic growth in Asia countries

Abstract

Currently, countries around the world are always trying to come up with policies for trade liberalization, investment, and deep integration into the world economy. All of these policies are directed towards a single goal, especially economic growth. Economic growth is considered an important factor in any country. Therefore, the objective of this study is to examine the impact of taxes on economic growth in 19 countries in Asia over 21 years from 2000-2020. By using pooled regression modeling (POLS) methods with panel data. Empirical results show that taxes have a positive effect on economic growth with a significance level of 1%. This means that the higher the total tax revenue, the stronger the economic growth. This study has proved that, with all other factors constant, when total tax revenue increases by 1%, economic growth will increase by 0.028%. Besides that positive result, characteristics such as trade openness, unemployment rate also have a significant impact on economic growth. On that basis, the study makes some suggestions for tax policy in these countries