Relationship between economic security and tax revenues (Evidence from MENA countries)

Subject Areas : Applied Economics

کریم رسولی ¹ , اسداله فرزین‌وش ²

1 - ندارد
2 - مسئول مکاتبات

Received: 2011-10-01 Accepted : 2011-11-15 Published : 2012-06-21

Keywords: economic security, Economic Freedom, Trade Freedom, Tax, MENA,

Abstract :

Income redistribution and establishing social justice and maintaining it are the major economic objectives that most governments are looking for them. Taxation is a tool that can redistribute wealth in society and can reduce class differences. Meanwhile, an efficient tax system could prevent the occurrence of economic corruption. Furthermore, economic security in a society with minimal risk and economic corruption can promote economic activities and lead to increase in tax revenues that help state to improve its services Economic security is a kind of public good or service that cannot be produced in the private sector in the market. This market failure leads to government intervention in providing economic security. Economic security and related issues can influence business atmosphere and national income and so can affect government tax revenues.  In this paper the empirical relationship between economic security and tax revenues in the selected countries of Middle East and North Africa (MENA) which have similar relative structures, have been investigated. For this purpose, the panel data models have been used to estimate mentioned relationship. According to the results, free trade as the first indicator of economic stability and security has significant and positive effect on tax revenues in MENA countries. Trade freedom, as a second variable has a significant and positive effect on tax revenues too. Financial Freedom as third indicator of economic stability and security as former variables has significant and positive effect on tax revenues. An important to be mentioned is that the property rights and tax revenues have negative relationship in the selected countries. Also, in selected countries economic growth doesn’t have a positive effect on tax revenues. Inflation rate does have positive and meaningful effects on tax revenues in MENA: Variables as exports and imports as control variables as a percentage of GDP have negative and inverse effect on tax revenues a percentages of GDP and capital formation as the third control variable has a positive and meaningful effect on tax revenues in MENA.