Tax and Growth in a Developing Country: The Case of Brazil

Sachsida, Adolfo; Mendonca, Mario Jorge Cardoso; Moreira, Tito Belchior Silva

doi:10.2139/ssrn.2772161

Tax and Growth in a Developing Country: The Case of Brazil

30 Pages Posted: 30 Apr 2016

See all articles by Adolfo Sachsida

Adolfo Sachsida

Institute for Applied Economic Research (IPEA); Institute of Applied Economic Research (IPEA)

Mario Jorge Cardoso Mendonca

Institute of Applied Economic Research (IPEA) - Directory of Macroeconomic Policy & Studies (DIMAC)

Tito Belchior Silva Moreira

Catholic University of Brasilia

Date Written: April 28, 2016

Abstract

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

Sachsida, Adolfo and Cardoso Mendonca, Mario Jorge and Moreira, Tito Belchior Silva, Tax and Growth in a Developing Country: The Case of Brazil (April 28, 2016). Available at SSRN: https://ssrn.com/abstract=2772161 or http://dx.doi.org/10.2139/ssrn.2772161