Does GDP Affect Tax Revenue?
Abstract
Indonesia's largest revenue comes from taxes which function to fund expenses. The increase in tax revenues must be in line with Indonesia's economic growth which is reflected in the Gross Domestic Product (GDP). This study analyzes the effect of GDP revenue on total tax revenue in Indonesia during 1988-2021 using control variables including; the money supply (M2), the population (POP), and the amount of exports and imports (XM). GRDP is the main variable because it has 17th sectors which an important in supporting economic growth and increasing the burden of tax objects. This study used a quantitative descriptive method with the Newey-West HAC method. The results showed that this study was unbiased, GDP had a positive-significant effect as indicated by the percentage of GDP growth with an average of 7% during the study period. The control variables that have a positive-significant effect are M2 and XM, and the population is not significant because the increase in the population does not support awareness of paying taxes. When there is an increase in GDP, it can provide an increase in tax revenue, as well as if there is an increase in the money supply (M2) and exports-imports (XM). Increasing revenue in GDP, M2 and XM can support the creation of new revenue objects for taxes, this is what will support the development process, especially in terms of financing. In order to increase financing for the development process, the government continues to seek sources of tax objects, not only from sectors in GDP, but also from potential export-import, and all transactions that can increase the money supply.
Downloads
References
Agbeyegbe, T., Stotsky, J., & WoldeMariam, A. (2006). Trade liberalization, exchange rate changes, and tax revenue in Sub-Saharan Africa. Journal of Asian Economics, 17(2), 261–284.
Ananda, C. F., Suratman, E., & Paddu, A. H. (2010). Impact Analysis of Transfer of BPHTB Collection to Regions Against Regional Fiscal Conditions. Journal of the Ministry of Finance of the Republic of Indonesia, Ministry of Finance Assistance Team for Fiscal Decentralization.
Apeti, A. E., & Edoh, E. D. (2023). Tax revenue and mobile money in developing countries. Journal of Development Economics, 161. https://doi.org/10.1016/j.jdeveco.2022.103014
Agbeyegbe, T. D., Stotsky, J., & WoldeMariam, A. (2006). Trade liberalization, exchange rate changes, and tax revenue in Sub-Saharan Africa. Journal of Asian Economics, 17(2), 261–284.
Bachas, N., Ganong, P., Noel, P. J., Vavra, J. S., Wong, A., Farrell, D., & Greig, F. E. (2020). Initial impacts of the pandemic on consumer behavior: Evidence from linked income, spending, and savings data. National Bureau of Economic Research.
Backhouse, R. E. (2021). Zachary Carter, The Price of Peace: Money, Democracy, and the Life of John Maynard Keynes. Œconomia. History, Methodology, Philosophy, 11–3, 511–518.
Bank, W. (2020). World Bank East Asia and Pacific Economic Update, Spring 2020: Preparedness and Vulnerabilities/Global Reverberations of COVID-19. The World Bank.
Bossone, B. (2021). Globalization of capital, erosion of economic policy sovereignty, and the lessons from John Maynard Keynes. Review of Keynesian Economics, 9(4), 512–520.
Carlson, B. (2023). Cassel, Ohlin, Åkerman, And The Wall Street Crash Of 1929. Journal of the History of Economic Thought, 45(1), 73–93.
Carrera, A. (2023). An Introduction to Macroeconomics. A Heterodox Approach to Economic Analysis: edited by L.-P. Rochon, and S. Rossi, Cheltenham, Northampton, MA, Edward Elgar Publishing, 2021, xx+ 665pp,£ 175.50 (hardback), ISBN: 978 1 78990 114 6,£ 36.00 (paperback), ISB. Taylor & Francis.
Correa, R. (2021). A Classical-Keynes Model of Money and Finance for Transiting Economies. The Indian Economic Journal, 00194662211017269.
Di Muzio, T. (2023). Capitalism, Money and Inequality in the World. REDUCED INEQUALITIES, 63.
Eggertsson, G. B., & Petracchi, C. (2021). Mr. Keynes and the “Classics”; A Suggested Reinterpretation. National Bureau of Economic Research.
Henrique, F., Terra, B., Filho, F. F., Cezar, P., & Fonseca, D. (2020). Review of Political Economy, v. 32, n. 3, 2020. 1–14.
Ma, C., Rogers, J. H., & Zhou, S. (2020). Global economic and financial effects of 21st century pandemics and epidemics. Covid Economics, 5, 56–78.
Olanrewaju, S. M., & Funlayo, A. K. (2021). Public Expenditure and Economic Growth: A Test of Wagner’s and Keynes Hypotheses in Nigeria and Angola Economies. European Journal of Humanities and Social Sciences, 1(3), 1–6.
Rössner, P. R. (2023). State Capacity and Capitalism from Cain to Keynes: Money, Markets and Manufacturing. In Managing the Wealth of Nations (pp. 203–208). Bristol University Press.
Sarı Aksakal, B. (2020). World Bank and Keynesian Economics. Business and Economics Research Journal, 10(1), 77–94. https://doi.org/10.20409/berj.2019.156
Badan Pusat Statistik. (2021). PDB Indonesia Triwulanan 2017-2021 (Direktorat Neraca Produksi, Ed.). Badan Pusat Statistik. https://www.bps.go.id/publication/2021/10/11/61698dbd34b39b73163fe49f/pdb-indonesia-triwulanan-2017-2021.html
Brooks, N. (2002). Canadian Tax Journal: The First Decade 1953-1962. Canadian Tax Journal, and of the Faculty of Law, 50(1).
Clemens, J., & Veuger, S. (2020). Implications of the Covid-19 Pandemic for State Government Tax Revenues.
Darman. (2013). Foreign Trade of Indonesia - United States. Journal of Economics, the University of Indonesia Esa Unggul, 4(2).
Dhian Adhitya, Birgitta Dian Saraswati, Sotya Fevriera, Virgiana Nugransih Siwi, & Yustinus Wahyudi. (2022). Confronting the COVID-19 By Digital Economy Utilizationin MSMEs. EcceS (Economics, Social, and Development Studies), 9(1), 86–106. https://doi.org/10.24252/ecc.v7i1.13382
DJPK. (2021). Total Tax Revenue in Indonesia Year 1988-2021. https://djpk.kemenkeu.go.id/
GoldmaAgbeyegbe, T. D., Stotsky, J., & WoldeMariam, A. (2006). Trade liberalization, exchange rate changes, and tax revenue in Sub-Saharan Africa. Journal of Asian Economics, 17(2), 261–284.
Bachas, N., Ganong, P., Noel, P. J., Vavra, J. S., Wong, A., Farrell, D., & Greig, F. E. (2020). Initial impacts of the pandemic on consumer behavior: Evidence from linked income, spending, and savings data. National Bureau of Economic Research.
Backhouse, R. E. (2021). Zachary Carter, The Price of Peace: Money, Democracy, and the Life of John Maynard Keynes. Œconomia. History, Methodology, Philosophy, 11–3, 511–518.
Bank, W. (2020). World Bank East Asia and Pacific Economic Update, Spring 2020: Preparedness and Vulnerabilities/Global Reverberations of COVID-19. The World Bank.
Bossone, B. (2021). Globalization of capital, erosion of economic policy sovereignty, and the lessons from John Maynard Keynes. Review of Keynesian Economics, 9(4), 512–520.
Carlson, B. (2023). Cassel, Ohlin, Åkerman, And The Wall Street Crash Of 1929. Journal of the History of Economic Thought, 45(1), 73–93.
Carrera, A. (2023). An Introduction to Macroeconomics. A Heterodox Approach to Economic Analysis: edited by L.-P. Rochon, and S. Rossi, Cheltenham, Northampton, MA, Edward Elgar Publishing, 2021, xx+ 665pp,£ 175.50 (hardback), ISBN: 978 1 78990 114 6,£ 36.00 (paperback), ISB. Taylor & Francis.
Correa, R. (2021). A Classical-Keynes Model of Money and Finance for Transiting Economies. The Indian Economic Journal, 00194662211017269.
Di Muzio, T. (2023). Capitalism, Money and Inequality in the World. REDUCED INEQUALITIES, 63.
Eggertsson, G. B., & Petracchi, C. (2021). Mr. Keynes and the “Classics”; A Suggested Reinterpretation. National Bureau of Economic Research.
Henrique, F., Terra, B., Filho, F. F., Cezar, P., & Fonseca, D. (2020). Review of Political Economy, v. 32, n. 3, 2020. 1–14.
Ma, C., Rogers, J. H., & Zhou, S. (2020). Global economic and financial effects of 21st century pandemics and epidemics. Covid Economics, 5, 56–78.
Olanrewaju, S. M., & Funlayo, A. K. (2021). Public Expenditure and Economic Growth: A Test of Wagner’s and Keynes Hypotheses in Nigeria and Angola Economies. European Journal of Humanities and Social Sciences, 1(3), 1–6.
Rössner, P. R. (2023). State Capacity and Capitalism from Cain to Keynes: Money, Markets and Manufacturing. In Managing the Wealth of Nations (pp. 203–208). Bristol University Press.
Sarı Aksakal, B. (2020). World Bank and Keynesian Economics. Business and Economics Research Journal, 10(1), 77–94. https://doi.org/10.20409/berj.2019.156
n, N. C., & Ozel, N. B. (2022). Executive compensation, individual-level tax rates, and insider trading profits. Journal of Accounting and Economics, 101574. https://doi.org/10.1016/j.jacceco.2022.101574
Gujarati, D. (2003). Basic Econometrics. Erlangga.
