Tax and Growth in a Developing Country: The Case of Brazil
30 Pages Posted: 30 Apr 2016
Date Written: April 28, 2016
This paper uses Brazilian quarterly data to estimate the impact of taxes over GDP per capita. The econometric results show a negative and statistically significant impact of the overall tax burden over per capita GDP. In average, an increase of 1 percent in the overall tax burden decreases GDP per capita by 0.3 percent. Furthermore, econometric results pointed out that a revenue neutral fiscal policy, which changes the tax structure toward consumption taxes and personal income taxes would improve economic growth. Besides that, we strongly recommend against both taxes over the capital stock and the corporate income taxes.
Keywords: tax, economic growth, fiscal policy prescription.
JEL Classification: E62; E69: H20
Suggested Citation: Suggested Citation