DEPENDENCE OF GOVERNMENT TAX BEHAVIOR ON ECONOMIC EFFICIENCY FACTORS FOR OECD COUNTRIES
DOI:
https://doi.org/10.56197/2786-5827/2023-2-3-2Keywords:
economic efficiency, tax rate, government tax behavior, CIT, GDP, FDI, per capita, OECDAbstract
Introduction. The article is devoted to the study of the principles, factors, and conditions of the tax behavior of the state, in particular with the use of changes in the tax burden. The present paper differs from the previous ones both in the topic of studying the relationship between the government's tax behavior and the efficiency of the countries' economies and in the approach to determining this dependence, since the latter can be observed only when each variant of the government's tax response is analyzed separately. The purpose of this work is to determine the factors and conditions that influence the government's decision related to the choice of tax behavior, the level of their influence, and, as a result, to determine the principles of the government's tax response. It'll improve our understanding of tax competition, let us forecast the behavior of the governments of countries of the world, and help optimize the country's economic response to the actions of others in international cooperation.
Materials and methods. For analysis, we outlined a set of potential macro-indicators of economic efficiency, such as GDP, GDP per capita, FDI, FDI per capita, and the ratio of FDI to GDP. We considered 3 options for governments' tax behavior: increasing corporate tax income (CIT), decreasing CIT, and keeping CIT at the previous level. Also, for each of the factors, we made the different distributions of Organization for Economic Cooperation and Development (OECD) countries into 3 groups: low-, medium-, and high-efficiency. We used methods of statistical analysis to verify the presence of dependence between the government's behavior and each of the selected indicators.
Results and discussion. As a result of the study, we found that GDP per capita has the greatest influence on the government's tax decisions. In addition, We concluded the governments of low-efficiency economies tend to increase the tax rate, the governments of countries with moderate economic efficiency consider it appropriate to reduce the corporate tax income rate, and the governments of the most efficient countries tend not to use the regulatory function of the CIT. So, governments mostly act as satisfices.
Conclusion. The obtained results allow us to understand the principles of governments’ decision-making, and, therefore, to forecast in some way their behavior in certain economic conditions. Moreover, it could help to understand why the “race to the bottom” situation appears. Possible directions for further research are expanding the analysis to a larger sample of countries (all countries of the world or regional sets ones), more basic studying of the causes of the revealed tax behavior, as well as an analysis of the “race to the bottom” issue taking into account the results obtained.
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