Nexus Between Government Expenditure and Government Tax Revenue in Sri Lanka

In the global economic administration, tax revenue has been identified as the engine of the government expenditure, but the relationship of them was not investigated econometrically, this situation formulated a research gap for tasting the relationship of them. The aim of this study was to examine the Cointegration relationship among the tax revenue and the government expenditure in Sri Lanka. This study considered two time series variables such as the tax revenue and the government expenditure. The tax revenue was considered as the independent variable and the government expenditure was considered as the dependent variable. The sample period of this study was from 1950 to 2013.The Cointegration technique was used to check the long run relationship and the Error Correction Mechanism was employed to investigate the short run behavior of the tax revenue on the government expenditure. According to the empirical results, the R-squared of the estimated model was 0.99. In the meantime, the Durbin Watson statistics was 0.828. However, this model did not suffer from the spurious problem because the residual of this model was stationary. The tax revenue has sustained positive relationship with government expenditure. And also, the partial coefficients of tax revenue and its probability values in the estimated model were 0.695 (0.000) in short run and 1.031 (0.000) in long run periods. Therefore, the tax revenue and government expenditure had cointegrated at level form I(0) and maintained the long and short run relationship between them.

Download Full-text

Educational Level and Tax Compliance: Empirical Evidence From Nigeria

International Journal of Accounting and Financial Reporting ◽

10.5296/ijafr.v10i1.16106 ◽

2020 ◽

Vol 10 (1) ◽

pp. 160

Author(s):

Stanley Ogoun ◽

Godspower Anthony Ekpulu

Keyword(s):

Educational Level ◽

Government Expenditure ◽

Tax Compliance ◽

Tax Revenue ◽

Education Expenditure ◽

Government Investment ◽

Ex Post ◽

National Priority ◽

Ex Post Facto ◽

The Government

The study interrogates the relationship between educational level and tax compliance in Nigeria. The study employs the ex post facto research design to ascertain how government investment in education enhances tax compliance. The study covers 17 years (2002-2018) for both tax revenue (a surrogate for tax compliance) and education expenditure (a surrogate for educational level). From the empirical results, the study concludes that there is a positive nexus between government expenditure on education and tax revenue. The study, therefore, recommends that as a matter of necessity, the government should invest more in the overall educational demand of her citizens not only from tax revenues but from other oil and non-oil sources. The governments, from the federal and state levels, should act as a matter national priority endeavour to meet up with the international budgetary benchmark allocation for education, as recommended by the United Nations Educational, Scientific and Cultural Organization (UNESCO) in its Education for All (EFA) document 2000-2015. This will give Nigerians more access to quality education that would result in moving up the global ranking in HDI with its resultant benefits.

Download Full-text

Designing an Optimum Fiscal Policy for Tobacco to Maximise the Tax Revenue, Social Savings and the Net Monetary Benefits in Sri Lanka

International Journal of Health Policy and Management ◽

10.15171/ijhpm.2019.114 ◽

2019 ◽

Author(s):

Sathira Kasun Perera ◽

Bharat Phani Vaikuntam ◽

Denny John ◽

Buddhika Senanayake

Keyword(s):

Fiscal Policy ◽

Sri Lanka ◽

Tobacco Use ◽

Tax Revenue ◽

Monetary Benefit ◽

Published Evidence ◽

Tobacco Tax ◽

The Government ◽

Net Monetary Benefit ◽

Tobacco Taxation

Background: Fiscal policy targeting tobacco control is identified as the most effective strategy for rapid control of tobacco use. An optimum fiscal policy to estimate the percentage taxation that will maximise the government tax revenue, social savings and the net monetary benefit has not been empirically designed before in Sri Lanka. Methods: A model was developed using Microsoft Excel 2016, utilizing up-to-date published evidence on the cigarette sales, current fiscal policy, social cost of tobacco use, consumer response and the price elasticity of cigarettes. Univariate estimates on the expected revenue from tobacco tax, average annual social savings and the net monetary benefit were predicted for different levels of tobacco taxation. A deterministic sensitivity analysis was performed covering all possibilities. The percentage taxation maximizing the government tax revenue and the net monetary benefit were identified. Results: It was estimated that a further 30% tax increase from the 2019 baseline will generate approximately LKR 3544 million per year of additional tax revenue for the government while saving LKR 28 069 million per annum as social savings. A fiscal elevation of 50% will produce identical annual tax revenue to that of 2018, while securing a social saving of more than LKR 47 600 million per annum. The maximum net monetary benefit is achievable at an overnight tax increase of 90% from the baseline, however with a short-term compromise in tax revenue. Conclusion: The well-defined thresholds take tobacco taxation advocacy in Sri Lanka a step forward and will assist the government in taking an informed decision on its fiscal policy for cigarettes.

Download Full-text

Tax Revenue, Tax Reform and Government Expenditure: The Case of Nigerian Economy (1994 – 2017)

Asian Journal of Economics Business and Accounting ◽

10.9734/ajeba/2020/v18i330283 ◽

2020 ◽

pp. 1-12

Author(s):

Chinedu Jonathan Ndubuisi ◽

Onyekachi Louis Ezeokwelume ◽

Ruth Onyinyechi Maduka

Keyword(s):

Income Tax ◽

Tax Reform ◽

Government Expenditure ◽

Value Added ◽

Series Data ◽

Tax Revenue ◽

Value Added Tax ◽

Tax Reforms ◽

Level Of Significance ◽

Excise Duties

The objective of this study is to empirically investigate the effect of tax revenue and years tax reforms on government expenditure in Nigerian. Tax revenue were explained using custom and excise duties, company income tax, value-added tax and tax reforms explained by the years in which reforms took place measured by dummy variables as proxies. In conducting this research, an annual time series data from central bank statistical bulletins and Federal Inland revenue Service of Nigeria spanning from 1994-2017 were employed. The data were tested for stationarity using the Augmented Dicker-Fuller Unit Root Test and found stationary at first difference. The Johansen co-integration test was also conducted and showed that the variables are co-integrated at the 5% level, which implied that there is a long-run relationship between the variables in the model. The presence of co-integration spurred the use of vector error correction model and VEC granger causality to determine the effects and decision for the study objective. Findings revealed that Customs and Excise Duties has positive (3.96) and significant (-8.38) impact on government expenditure at 5% level of significance (t=8.38>1.96), Company Income Tax has negative (-1.25) and significant (2.98) impact on government expenditure at 5% level of significance (t=2.98>1.96), Value added tax has positive (8.54) and significant (3.90) impact on government expenditure at 5% level of significance (t=3.90>1.96) and Tax reforms periods has negative(-3.52E+12) and significant (8.39) impact on government expenditure at 5% level of significance (t=8.39>1.96). The study thus concluded that tax revenue and tax reforms significantly affect the Nigerian economy with the direction of causation running from government revenue to government expenditure, supporting the revenue-spend or tax-spend hypothesis. It was recommended while seeking to increase its revenue base via tax should also increase their expenditure profile to create a balance with the tax revenue and every other tax reform should be geared towards this balance.

Download Full-text

Is consumption-Laffer curve hump-shaped? The VAT evasion channel

Journal of Economic Studies ◽

10.1108/jes-05-2017-0115 ◽

2018 ◽

Vol 45 (3) ◽

pp. 598-609

Author(s):

Aleksandar Vasilev

Keyword(s):

Design Methodology ◽

Government Expenditure ◽

Tax Revenue ◽

Consumption Tax ◽

Free Lunch ◽

Content Type ◽

Tax Rate ◽

The Public ◽

Laffer Curve ◽

Practical Implications

Purpose The purpose of this paper is to show a standard RBC model, when augmented with a VAT evasion channel, where evasion depends on the consumption tax rate, can produce a hump-shaped consumption-Laffer curve. Design/methodology/approach The methodology is in the spirit of modern quantitative macroeconomic literature. Findings The model with VAT evasion can generate a peaking consumption tax revenue curve, which is a little discussed result in the taxation literature. Research limitations/implications The paper contributes to the public finance literature by providing evidence for the importance of the evasion mechanism, while at the same time adding to the debate about the existence of a peak tax rate for consumption tax revenue. Practical implications Contrary to popular belief, raising VAT rate as a cheap way (being a tax on demand) to finance government expenditure, is still not a free lunch, and raising the rate, especially in a country with substantial VAT evasion, quickly leads to a drop in the revenue associated with that category. Originality/value This is the first study that provides a tractable model of VAT evasion, and a setup where consumption tax revenue curve is peaking.

Download Full-text

Size of government and economic growth: A nonlinear analysis

Economic Annals ◽

10.2298/eka1294007h ◽

2012 ◽

Vol 57 (194) ◽

pp. 7-30 ◽

Cited By ~ 9

Author(s):

Shanaka Herath

Keyword(s):

Economic Growth ◽

Sri Lanka ◽

Polynomial Regression ◽

Developing Economies ◽

Government Expenditure ◽

Analytical Framework ◽

Optimal Level ◽

Size Of Government ◽

Developed Economies ◽

Productive Output

The new growth theory establishes, among other things, that government expenditure can manipulate the economic growth of a country. This study attempts to explain whether government expenditure increases or decreases economic growth in the context of Sri Lanka. Results obtained employing a productive output series and applying an analytical framework based on second degree polynomial regression are generally consistent with previous findings: government expenditure and economic growth are positively correlated; excessive government expenditure is negatively correlated with economic growth; and investment promotes growth. In a separate section, the article examines Armey?s idea of a quadratic curve that explains the level of government expenditure in an economy and the corresponding level of economic growth [Armey, D. (1995). The Freedom Revolution. Washington, D.C.: Regnery Publishing Co.]. The findings confirm the possibility of constructing the Armey curve for Sri Lanka, and it estimates the optimal level of government expenditure to be approximately 27%. This article adds to the literature indicating that the Armey curve is a reality not only for developed economies, but also for developing economies.

Download Full-text

Corruption, fiscal policy, and growth: a unified approach

The B E Journal of Macroeconomics ◽

10.1515/bejm-2016-0010 ◽

2017 ◽

Vol 17 (2) ◽

Cited By ~ 1

Author(s):

Sugata Ghosh ◽

Kyriakos C. Neanidis

Keyword(s):

Fiscal Policy ◽

Government Spending ◽

Income Tax ◽

Government Expenditure ◽

Tax Revenue ◽

Unified Approach ◽

Unified Framework ◽

Bureaucratic Corruption ◽

Inflation Rates ◽

The Impact

AbstractWe study the effects of bureaucratic corruption on fiscal policy and economic growth, where corruption (i) reduces the tax revenue raised from households, (ii) inflates the volume of government spending, and (iii) reduces the productivity of “effective” government expenditure. We distinguish between the policies pursued by (a) a non-optimizing, and (b) an optimizing government. For both cases, corruption leads to higher income tax and inflation rates and a lower level of government spending, thus hindering growth. In the circumstances, an activist government could allocate its resources in attempting to reduce the type of corruption that harms growth the most. Finally, the findings from our unified framework could rationalize the sometimes conflicting empirical evidence on the impact of corruption on growth in the literature.

Download Full-text

Taxation and Inequality in Uganda, 1900–1964

The Journal of Economic History ◽

10.1017/s0022050700105157 ◽

1978 ◽

Vol 38 (2) ◽

pp. 418-438 ◽

Cited By ~ 6

Author(s):

Vali Jamal

Keyword(s):

Fiscal Policy ◽

Economic History ◽

Government Expenditure ◽

Major Effect ◽

Tax Revenue ◽

Government Revenue ◽

Systematic Analysis ◽

History Of ◽

Heavy Burden ◽

Distribution Of Income

Amuch neglected topic in the economic history of Uganda is the contribution of fiscal policy to the inequality of income. While generalizations have been made about the heavy burden of taxation on Uganda's Africans and the bias in the distribution of government expenditure, no systematic analysis of these issues has been undertaken. It is my objective to rectify this shortcoming, and to provide estimates of the incidence of taxation on different races and sectors of the economy at different periods. This study should be of parallel interest to my earlier article, demonstrating the extent of inequality in Uganda, since it shows that the government's tax policy had a major effect on the distribution of income in the country. The present paper focuses particularly on the farmers, who have always been at the bottom of the distribution ladder, and attempts to answer the following questions. 1.) What were the major sources of tax revenue in Uganda, and what proportion of the revenue was derived from the farmers? 2.) What was the farmers' rate of taxation compared to that of other sections of the population? 3.) How was expenditure out of government revenue distributed?

Download Full-text

Expenditure on sports and leisure by the Government of the State of Piauí

Journal of Physical Education ◽

10.4025/jphyseduc.v32i1.3202 ◽

2020 ◽

Vol 32 (1) ◽

Author(s):

Edmilson Santos Dos Santos ◽

Luciano Juchem ◽

Luiz Alcides Ramires Maduro

Keyword(s):

State Government ◽

Quantitative Data ◽

Government Expenditure ◽

Social Assistance ◽

The State ◽

Descriptive Statistics ◽

Tax Revenue ◽

Spending Behavior ◽

The Government ◽

Social Agendas

The present study aimed to analyze the participation of the government of Piauí in the bottom-up funding of sport and leisure public policies from 2013 to 2017, embracing four aspects: (1) comparison of expenditure with tax revenue; (2) comparison of expenditure with other social agendas, notably Social Assistance and Culture; (3) identifying the spending behavior regarding subfunctions; (4) analyzing the efficiency in resource liquidation comparatively. Quantitative data were collected from the National Treasure website and submitted to descriptive statistics. In a conclusive manner, the study indicated that: (a) state government expenditure with the SLF is far shorter than the estimated by the II National Sport Conference; (b) expenditure has not followed the positive revenue variation during the period; (c) when compared to Social Assistance and Culture, Sport and Leisure has been the less considered area on the government’s agenda; (d) there has been an abrupt chance in the government’s agenda towards performance sport; (e) the government acts in an efficient way regarding the liquidation of planned resources.

Download Full-text

Model Pertumbuhan Utang Luar Negeri Indonesia

10.31219/osf.io/vs53h ◽

2018 ◽

Author(s):

Muhammad Subhan

Keyword(s):

Interest Rate ◽

Government Expenditure ◽

External Debt ◽

Tax Revenue ◽

Literature Study ◽

First Order ◽

Expenditure Rate ◽

The Government ◽

Linear Differential ◽

The Interest Rate

The Government of Indonesia do external debt because government expenditure is greater than his revenue. External debt of Indonesia increas every year. To see its growth, it can be done with make a model of Indonesia’s external debt. This research is literature study. The model of the growth of Indonesia’s external debt in form of linear differential equations of first order that the solution can be determined. From the analysis results, Indonesia’s external debt affected by the interest rate, the expenditure rate, the tax revenue rate and non-tax revenue rate.

Download Full-text