The Impact of Tax Burden on the Informal Economy: A Panel Threshold Analysis On BRICS-T Countries
One of the most significant challenges facing economies is the prevalence of informal activities, which can negatively impact both efficiency and equity objectives. This study aims to examine the impact of tax policies on the informal economy in a sample group consisting of nine BRICS countries and...
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| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Istanbul University Press
2024-11-01
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| Series: | Maliye Çalışmaları Dergisi |
| Subjects: | |
| Online Access: | https://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/854B6B08B234486AA136A7C1E3FCB2A2 |
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| Summary: | One of the most significant challenges facing economies is the prevalence of informal activities, which can negatively impact both efficiency and equity objectives. This study aims to examine the impact of tax policies on the informal economy in a sample group consisting of nine BRICS countries and Turkey for the period 1998-2020. For this purpose, the panel threshold value model, a non-linear method, was employed, with the tax burden level and real GDP per capita identified as the threshold variables. According to the analysis results, it is found that the tax burden and the per capita income level have a threshold value effect in the relationship in question. Specifically, the tax burden does not affect the informal economy at levels below the threshold value, and it increases informality above the threshold value. Otherwise, the sensitivity of the informal economy to the tax burden is higher when the per capita income level is below the threshold value. The results of the analysis also indicate that per capita income is negatively correlated, but inflation and regulations are positively correlated with the informal economy. |
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| ISSN: | 2757-6728 |