Journal of Social Sciences

Tax Revenues and Economic Growth: An Empirical Investigation for Greece Using Causality Analysis

Thomas Anastassiou and Chaido Dritsaki

DOI : 10.3844/jssp.2005.99.104

Journal of Social Sciences

Volume 1, Issue 2

Pages 99-104

Abstract

This study examines the relationship between tax revenues and the rate of economic growth for Greece. The viewpoint that the low ratio of direct to indirect taxation promotes high economic growth has been a main subject for discussion. However, not many papers have attempted to test the above hypothesis. One of the main problems that researchers are facing is the lack of time series data over a sufficiently long period. This brings out particular problems when testing for unit roots and cointegration between time series of the variables used. In this study, we try to analyse the relationship between total tax revenues, income tax and tax on capital gains, gross domestic saving and the rate of economic growth. In order to find this relationship, annual data from 1965 until 2002 and causality analysis are used. The findings have shown that there exists causal relationship between tax revenues and economic growth in Greece.

Copyright

© 2005 Thomas Anastassiou and Chaido Dritsaki. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.