The Casuality Relationship Among Direct Taxes, Indirect Taxes and Economic Growth: The Case of Turkey (2006-2018)

• Published in: International Journal of Public Finance Vol. 6; no. 1; pp. 21 - 46
• Main Authors: Ersin Nail Sağdıç, Duygu Aydın
• Format: Journal Article
• Language: English
• Published: International Public Finance Conference/Turkey 01.06.2021
• Subjects: direct taxes; economic growth; indirect taxes
• ISSN: 2548-0499; 2548-0499
• DOI: 10.30927/ijpf.847839

In this study, the relationship between the direct and indirect taxes and economic growth between the years 2006-2018 including the provinces in Turkey was investigated by panel data analysis. After investigating the cross-section dependence and stationarity levels of the variables, longterm relationship between the variables was determined by the Westerlund and Edgerton LM Bootstrap Cointegration Test (2007). The causality relationship between the variables was determined by the Panel VECM Causality Test. The results of the present study show that there is a long-term relationship between the direct and indirect taxes and economic growth between the years 2006-2018 in Turkey. it was determined that there is a one-way causality relationship from direct taxes to economic growth both in the long and short term. Moreover, it was put forward that there is a one way causality relationship from indirect taxes to economic growth in the short term while there is a two way causal relationship between economic growth and indirect taxes in the long term.