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Scope
Scope
Sri
Lanka Nepal
Corporate Income Tax - tax based on the income made by the corporation Personal Income Tax - kind of tax imposed on an individual with respect to his/her income
Indirect tax tax on consumption levied on the sale/exchange/lease of goods or services Real Gross Domestic Product inflationadjusted measure of the value of a nations total output of goods and services
Research Questions
What is the impact of the 3 standard tax measures (corporate, income, indirect) as a whole on the economic growth from 5 Asian Developing countries (Philippines, Indonesia, India, Sri Lanka, and Nepal)?
Research Questions
What is the impact of each of the tax measures on the real GDP from 5 Developing Asian countries?
Research Questions
Do higher marginal tax rates automatically lead to a countrys growth and development? Or do lower taxes do better?
Research Simulacrum
Personal Income Tax
P2 (-)
P3 (-)
P1 (-)
Value-Added Tax
P4 (-)
Proposition #1
Higher marginal tax rates on all three standard tax policies have a negative impact on the real GDP of the selected five developing Asian countriesPhilippines, Indonesia, India, Sri Lanka, and Nepal.
(Poulson and Kaplan 2008, Dahlby and Ferede, 2006, Lee and Gordon, 2004, Romer and Romer, 2007, Geloso and Guenette, 2010, Padda and Akram, 2006, Bonu N. S. and Motau P., 2009, Peter and Kerr 2001)
Proposition #2
Higher tax rates on compensation tax or personal income tax slows down economic growth of this studys scope. (Caucutt and Imrohoroglu, 2006, Rider 2006, OECD, 2009, Tripathi, Sinha and Agarwal, 2011, Weichienriede, 2005, Romer and Romer, 2007, Geloso and Guenette, 2010, Arnold, Brys, Heady, Johansson, Schwellnus and Vartia, 2011, Lee and Gordon, 2011, Yamarik, 2000, Rivas 2003)
Proposition #3
Higher tax rates on corporate income taxes have a negative influence on individual and business decisions that decrease economic growth of this studys scope. (Rider 2006, Young and Saltiel 2011, Tripathi, Sinha and Agarwal, 2011, Romer and Romer, 2007, Geloso and Guenette, 2010, Arnold, Brys, Heady, Johansson, Schwellnus and Vartia, 2011, Lee and Gordon, 2011, Yamarik, 2000, Rivas 2003)
Proposition #4
Flat tax rates on indirect/sales tax/Value-Added Tax discourage employment, thus leading to lower economic growth of this studys scope. (Weichienriede, 2005, Sheshinski 2002, Liao and Lia 2011, Nurudeen and Usman 2010)
Research Method
The researchers study is quantitative in nature and is going to have a panel data that will cover periods starting from 1992-2010.
Research Method
Eq.2 (RGDPit) = 0-(1it)- Eq.3 ln(RGDPit) = 0-ln(2tit)- Eq.4 ln(RDGPit ) = 0 - ln(3 sit )-
Research Method
Where RGDPit = real gross domestic product of each country belonging to the scope of the study it = percentage share of personal income tax in the total revenue tit = percentage share of the consumption tax/ taxes on goods and services (VAT) as a part on the total revenue sit = percentage share of the corporate income tax as a share in the total revenue
Results
Negative impact of all three standard tax variables on the economic growth (rGDP) of the 5 developing Asian countries
Results
Negative relationship between compensation tax/personal income tax and economic growth (rGDP)
Results
Negative relationship between corporate income tax and economic growth (rGDP)
Results
Policy Implications
In a developing country with low levels of human capital, income and investments, imposing higher tax rates will reduce incentives to:
Entrepreneurs
Employees Consumers
Recommendations
Comparison between developing Asian countries and developed Asian countries Allocation of tax revenues to different public sector activities