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THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.80, # 2, 2023, pp. 47-59
CONCLUSIONS
Since 2004, Azerbaijan used oil revenues to finance government expenditure besides
tax revenues. Until the sharp decrease in oil prices in 2014-2015, Azerbaijan’s
economy boomed thanks to oil revenues. Since Azerbaijan’s economy experienced a
sharp recession and devaluation of currency after a decrease in oil prices, the emphasis
has been on diversifying away government revenues from the oil economy and
founding fiscal rules. While transfers from SOFAZ (State Oil Fund of Azerbaijan)
summed up to average of an 54% of total budget revenues in the period of 2010-2015,
this number has been 42% on average since 2015. As the government strategy focuses
on decreasing dependency of the economy and budget revenues from the oil sector,
the impact of government tax revenue on growth attracts more interest.
We analyzed the impact of tax revenue on economic growth utilizing the ARDLBT
approach and found a negative link between government tax revenue and non-oil
economic growth in both the short and long run. Regarding total GDP, there is still a
statistically significant negative link between tax revenue and total economic growth,
but the weak negative link in the short-term.
Combining the findings of a statistically significant negative link between government
revenue and non-oil GDP growth in the long run with the focus on government
strategy on enhancing non-oil economic growth, raises a crucial concern. Considering
the vast literature review on the different economic impacts of various taxes, we think
there is need for further research on this topic. Unfortunately, currently, there is no
publicly available quarterly data on tax revenues by type. Research on the impact of
tax types on economic growth separately would offer important findings for tax
policy. By changing the tax revenue structure on behalf of tax types with less harm on
economic growth, budget revenue targets may be satisfied without halting economic
growth.
REFERENCES
The Tax Code of the Republic of Azerbaijan. https://cis-legislation.com/document.
fwx?rgn=2601
Central Bank of the Republic of Azerbaijan – www.cbar.az
Abata, M.A., Osamor, I.P., Elluh, C.C. (2023). Abata, M.A., Osamor, I.P., Elluh, C.C.
(2023). The Effect of Direct and Indirect Taxes on Economic Growth: Evidence from
Nigeria. EPRA International Journal of Economics, Business and Management
Studies (EBMS). Vol. 10 No. 6. https://doi.org/10.36713/epra13679
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