You are here

Home » Content

Impact of tax structure system on GDP and progressivity: The case of Vietnam

Journal Name:

  • International Journal of Innovation and Applied Studies

Publication Year:

  • 2013

Keywords (Original Language):

Author NameFaculty of Author
Bookmark/Search this post with
Abstract (Original Language): 
To find out impacts of tax structure system in Vietnam on GDP and progressivity, models employed are Fixed- Effects and Two-Stage Least Squares, together with the regression model of tax progressivity. Data’s source is from Vietnam General Statistics Office. It is cross-sectional time series over the period 1997-2010 for different 61 provinces in Vietnam. Findings present that Vietnam’s tax policies are progressive, their integration policy impacts on the economic growth positively. In addition, the result is proved there is a significant relationship between the state budget and GDP. As a result, the budgetary expenses must be paid attention strictly. Because coefficients of value-added tax and corporate income tax are positive and significant, an increase in value-added tax or/and corporate income tax causes an increase in GDP. However, this view for a long-term is a negative impact on the economic growth, because the country can lose competitive advantages to attract foreign development investment, if keeping high tax rates. Note that several inadequacies in policies need reforms in both policies and tax structure system, in which corporate income tax must be focused, because of mobilization of financial outside the state is unstable. Currently, tax policies in Vietnam combine so many goals in each form of encouragement while the policy objectives are conflict, which makes difficulties to carry out. Existing lack of harmony among the taxes in the tax policy can cause a main reason of a decrease in the revenue target of the state and in regulating macro economy.
FULL TEXT (PDF): 
PDF icon arastirmax-impact-tax-structure-system-gdp-and-progressivity-case-vietnam.pdf
  • 2
359
365
  • English

REFERENCES

References: 

[1] L. Bretschger, “Taxes, mobile capital, and economic dynamics in a globalizing world”, Journal of Macroeconomics, no.
32, pp. 594–605, 2010.
[2] S. Bucovetsky, “Asymmetric tax competition”, Journal of Urban Economics, no. 30, pp. 167-181, 1991.
[3] J. D. Wilson, “Tax Competition with Interregional Differences in Factor Endowmets”, Regional Science and Urban
Economic, no. 21, pp. 423-451, 1991.
[4] T. A. Hakim and I. Bujang, “The impact and consequences of tax revenues’ components on economic indicators:
Evidence from panel group data”, Internal Research Journal of Finance and Economics, no. 63, pp. 82-95, 2011.
[5] C. D. Romer and D. H. Romer, “The Macroeconomic Effects of Tax Changes: Estimates Based on New Measure of Fiscal
Shocks”, NBER Working Paper, no. 13264, 2007.
2 Values in parentheses are t-value and *** is significant at 1% level.
La Xuan Dao and Tu Van Binh
ISSN : 2028-9324 Vol. 4 No. 2, Oct. 2013 365
[6] H. Uhliga and N. Yanagawa, “Increasing the capital income tax may lead to faster growth”, European Economic Review,
no. 40, pp. 1521-1540, 1996.
[7] J. R. Gober and J. O. Burns, “The Relationship between Tax Structures and Economic Indicators”, Journal of International
Accounting, Auditing & Taxation, no. 6, pp. 1-24, 1997.
[8] J. J. R. Hines and L. H. Summers, “How globalization affects tax design”, The National Bureau of Economic Research, vol.
1, no. 23, pp. 123-158, 2009.
[9] E. Engen and J. Skinner, “Taxation and Economic Growth, National Tax Journal”, vol. 4, no. 49, pp. 617-642, 1996.
[10] T. Baunsgaard M. Keen, “Tax Revenue and (or?) Trade Liberalization”, Journal of Public Economics, no. 94, pp. 563-577,
2010.
[11] F. Padovano and E. Galli, “Comparing the Growth Effects of Marginal vs. Average Tax Rates and Progressivity”, European
Journal of Political Economy, no. 18, pp. 529-544, 2002.
[12] G. Glomm and B. Ravikumar, “Taxes Government Spending on Education and Growth”, Review of Economic Dynamics,
no. 1, pp. 306–325, 1998.
[13] L. Slemrod, “The Truth About Taxes and Economic Growth”, Challenge, vol. 1, no. 46, pp. 5-14, 2003.
[14] Y. Lee and R. H. Gordon, “Tax Structure and Economic Growth”, Journal of Public Economics, no. 89, pp. 1027-1043,
2005.
[15] A. K. Rose, “Do We Really Know that the WTO Increases Trade?”, The American Economic Review, vol. 1, no. 94, pp. 98-
114, 2004.
[16] S. Ogibayashi and K. Takashima, “Influence of Government Expenditure Policies and Tax Rate on GDP in an Agen-Based
Artificial Economic System”, Agent-Based Social System, no. 10, pp. 147-161, 2013.
[17] E. Ferede and B. Dahlby, “The impact of tax cuts on economic growth: Evidence from the Canadian provinces”, National
Tax Journal, vol. 3, no. 65, pp. 563-594, 2012.
[18] S. Mahdvi, “The level and composition of tax revenue in developing countries evidence from unbalanced panel data”,
International Review of Economics and Finance, no. 17, pp. 607-617, 2008.
[19] Veronika and Lenka, “Taxation of Corporations and Their Impact on Economic Growth: The Case of EU Countries”,
Journal of Competitiveness, vol. 4, no. 4, pp. 96-108, 2012.
[20] B. McCallum and J. Whitaker, “The effectiveness of fiscal feedback rules and automatic stabilizers under rational
expectations”, Journal of Monetary Economics, no. 5, pp. 171–186, 1979.
[21] A. Benavie and R. Froyen, “A balanced-budget constraint in modern macromodels”, Southern Economic Journal, no. 53,
pp. 247–258, 1986.
[22] C. Waller and D. VanHoose, “Endogenous wage indexation and optimal monetary policy with and without a balanced
budget”, Journal of Economics and Business, no. 41, pp. 21–31, 1989.
[23] J. P. Daniels and D. D. VanHoose, “Openness, Income-Tax Progressivity, and Inflation”, Journal of Macroeconomics, no.
31, pp. 485-491, 2009.
[24] F. Widmalm, “Tax Structure and Growth: Are Some Taxes Better than Others?”, Public Choice, no. 107, pp. 199-219,
2001.
[25] D. Hristu-Varsakelis, S. Karagianni and A. Saraidaris, “Equilibrium conditions in corporate tax competition and Foreign
Direct Investment flows”, Economic Modelling, no. 28, pp. 13-21, 2011.
[26] M. Hanlon and S. Heitzman, “A review of tax research”, Journal of Accounting and Economics, no. 50 pp. 127–178, 2010.
[27] Phạm Huyền, “Lạm phát cả năm 6,81%, GDP tăng 5,03%,” Báo VietNamNet, 2013.
[Online] Available: http://vietnamnet.vn/vn/kinh-te/102376/lam-phat-ca-nam-6-81---gdp-tang-5... (2013)

Thank you for copying data from http://www.arastirmax.com