An investigation the impact of Factors affecting the optimal tax rate in Iran's economy

Document Type : Original Article

Authors

1 at University of Applied Sciences

2 Islamic Azad University

3 economic expert , economic and financial Affairs Directorate General of south Khorasan province

Abstract

The public sector and its role in the implementation of financial policies for Iran are of special importance for two reasons. On the one hand, the main source of government income is the foreign currency income from oil exports, which is strongly affected by international shocks, and on the other hand, due to the prominent role of the government in Iran's economy, the government's financial behavior in the form of annual budgeting and policies Government finance, like tax collection, has a great impact on other productive sectors. Therefore, it is necessary to follow the implementation of financial policies with special care. In this regard, tax is one of the most stable government revenues and can be used as a tool to implement social justice and encourage investment. Tax collection in an optimal way can have an effect on economic indicators in addition to its positive effects. The purpose of this article is to determine the effective factors on the optimal tax rate in Iran's economy during the period of 1981-2016 with the help of the optimal control method. The results of the research show that the consumption ratio of the private sector to the public sector and the depreciation rate have a negative effect, the ratio of public sector investment to the private sector, capital stock, technical progress coefficient, the elasticity of production compared to the investment of the public and private sectors have a positive effect on the optimal tax rate. are Among the mentioned factors, the ratio of private sector consumption to the public sector and the elasticity of production compared to private sector investment have the greatest impact on the optimal tax rate. Depending on the value of the mentioned variables, the optimal tax rate in the economy is between 22.88 and 25.5 percent. The average tax rate in the period under review was about 14% at constant prices. One of the reasons for the low tax rate is the existence of tax exemptions, the exclusion of taxes on some activities, and the dependence of the government budget on oil. Therefore, for the optimization of taxation in the economy, it is necessary to expand the tax bases, prevent tax evasion in the economy, collect taxes in a targeted manner from activities, reduce the government budget deficit, especially the current budget, remove dependence on oil revenues, and downsize and reduce the administration of the government. The attention of policy makers.

Keywords

Main Subjects

References

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Public Sector Economics Studies
Volume 3, Issue 2
July 2024
Pages 271-300

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History

  • Receive Date: 23 April 2024
  • Revise Date: 10 June 2024
  • Accept Date: 11 June 2024

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