THE ASYMMETRIC RELATIONSHIP BETWEN TAX REVENUES AND ECONOMIC GROWTH IN TURKEY: A NARDL COINTEGRATION APPROACH

Abstract

The aim of this study is to contribute to the creation of optimal tax composition in Turkey by revealing the effects of different types of taxes on economic growth. For this purpose, the relationships between total tax revenues, goods and services tax, property tax, customs tax, and economic growth were investigated using data from Turkey for the period 1965-2018. In examining these data a Nonlinear ARDL (NARDL) approach was used which takes into account asymmetric responses. Empirical findings from this analysis indicates the existence of a long-term synchronous relationship between these variables. However, the asymmetric and symmetric relationships differ by the variable and the time period being examined. The asymmetric relationships revealed that the positive effects of tax revenues on economic growth are stronger than the positive effects created by tax reductions. This shows the importance of broadening the tax base and making regulations that ensure regular tax collection to generate more tax revenue.