GDP Growth and Indirect Taxation in Bangladesh: Related Issues, Consequences and Expectation
International Journal of Business and Economics Research
Volume 8, Issue 5, October 2019, Pages: 286-296
Received: Jul. 10, 2019;
Accepted: Aug. 6, 2019;
Published: Aug. 20, 2019
Views 454 Downloads 122
Aoulad Hosen, Department of Economics, National University, Gazipur, Bangladesh
This is an empirical study that takes GDP growth and indirect tax in Bangladesh as its cynosure. It examines the relationship between the growth rate of Gross Domestic Product (GDP) and the indirect-tax for the policy issues regarding long-term macroeconomic stability as well as economic development of Bangladesh. This paper focuses on the impact of indirect taxation on GDP and demonstrates the influence that taxation has on the tax paying individual and business firms irrespective of economic scale. To analyze the relationship between GDP and indirect tax, this research incorporated econometric models for time series data of Bangladesh over a period of 43 years. The results show, if the Government in the long run increases the collection of indirect tax revenue by one percent (USD 167.511 million) then the GDP will decrease to a 0.96 percent (USD 2,572 million). The study concludes that the stability of economic growth can be achieved through a reformed tax policy on the basis of the country’s socioeconomic strength and the canons of taxation.
GDP Growth and Indirect Taxation in Bangladesh: Related Issues, Consequences and Expectation, International Journal of Business and Economics Research.
Vol. 8, No. 5,
2019, pp. 286-296.
Bangladesh Economic Review (2018). Finance Division, Ministry of Finance, Bangladesh.
Perspective Plan of Bangladesh (2010-2021). General Economics Division Planning Commission Government of the People’s Republic of Bangladesh April 2012. Towards Middle Income Economy, 2-3.
Annual Report 2015-2016 (2016). Research and Statistics Section, National Board of Revenue, Ministry of Finance, Bangladesh.
Gale G, William Samwick A (2014). Andrew Effects of Income Tax Changes on Economic Growth. Economic Studies at Brookings, Washington, DC 20036. https://www.brookings.edu/wpcontent/uploads/2016/06/09_Effects_Income_Tax_Changes_Economic_Growth_Gale_Samwick.pdf
Household Income and Expenditure Survey (HIES) (2016). Pleminary Report, Bangladesh Bureau of Statistics, Statistics and Information Division (SID), Ministry of planning, Bangladesh, 40-42. https://www.academia.edu/37874731/Preliminary_Report_on_Household_Income_and_Expenditure_Survey_2016_BANGLADESH_BUREAU_OF_STATISTICS_BBS_STATISTICS_AND_INFORMATICS_DIVISION_SID
Keynes J M (1936). The General Theory of Employment, Interest and Money. London, Macmillan (reprinted 2007).
Hosen A, Asad Md (2018). Reconciliation between Taxation and GDP Growth in Bangladesh: Issues and Arguments for Social Justice. International Journal of Research in Commerce, Economics & Management, 8 (10): 2-3.
Nadeem I, Muhammad F A, Suliman S (2015). Empirical Analysis of Tax Revenues and Its Impact on Economic Growth of Pakistan. Journal of Economics and Sustainable Development, 6 (1): 110-118. https://pdfs.semanticscholar.org/fdc0/d05f20260d533f05e5af99892ced5082286c.pdf
Plosser C I (1992). The Search for Growth Federal Reserve of Kansas City. Symposium Series Policies for Long-Run Economic Growth. Economic Researcher, 35 (2): 57-86.
James D, Gwartney Robert A, Lawson (2006). The Impact of Tax Policy on Economic Growth: Income Distribution and Allocation of Taxes. Social Philosophy and Policy, 23 (2): 28 -52.
Ergete F, Bev D (2012). The Impact of Tax Cuts on Economic Growth: Evidence from the Canadian Provinces. National Tax Journal, 65 (3): 563–594. https://www.ntanet.org/NTJ/65/3/ntj-v65n03p563-94-impact-tax-cuts-economic.pdf
Engen E, Skinner J (1996). Taxation and economic growth. National Tax Journal, 49 (4): 617-642.
Kalecki M (1976). Essays on Developing Economies, Sussex, The Harvester Press Limited.
Blanchard O, Perotti R (2002). An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output. Quarterly Journal of Economics, 117 (4): 1329-68.
Yi F, Suyono E (2014) The Relationship between Tax Revenue and Economic Growth of Hebei Province Based on The Tax Multiplier Effect. Global Economy and Finance Journal, 7 (2): 1–18.
John U I, Ebieri J, Emmanuel A (2014). Assessment of the Long-Run Equilibrium Relationship between Tax Revenue and Economic Growth in Nigeria: 1986 to 2012. The SIJ Transactions on Industrial, Financial & Business Management (IFBM), 2 (2).
Lutfunnahar B (2007). A Panel Study on Tax Effort and Tax Buoyancy with Special Reference to Bangladesh. Working Paper 715, Policy Analysis Unit (PAU), Research Department, Bangladesh Bank.
Roshaiza T, Loganathan Nanthakumar, Sisira R N (2011). The Effect of Economic Growth on Taxation Revenue: The Case of a Newly Industrialized Country. International Review of Business Research Papers, 7 (1): 319-329.
Solow R (1956). A Contribution to the Theory of Economic Growth. Quarterly Journal of Economics, 70: 65-94.
Kwiatkowski, Phillips, Schmidt, Shin (KPSS) (1992). Testing the Null Hypothesis of Stationary against the Alternative of a Unit Root. Journal of Econometrics, 54: 159-178.
Johansen S (1998). Statistical Analysis of Cointegrating Vectors. Journal of Economic Dynamics and Control, 12: 231-254.
Johansen S, K Juselius (1990). Maximum Likelihood Estimation and Inference on Cointegration With Applications to the Demand for Money. Oxford Bulletin of Economics and Statistics, 52: 169-210.
Granger C W J (1969). Investigating Causal Relations by Econometric Models and Cross-spectral Methods. Econometrica, 37 (3): 424–438.