Impact of Direct Taxation on Economic Growth: Empirical Evidence Based on Panel Data Regression Analysis at the Level of Eu Countries

Through fiscal policy, the government can influence businesses and individuals in order to regulate their behaviour. The research used panel data from all 27 EU countries covering the period 2008–2020 to investigate the impact of direct taxation on economic growth at the level of two main clusters of countries concerning fiscal efficiency. Therefore, the analysis employed cluster methods to classify the main EU countries in both groups of countries with a high level of fiscal efficiency and those with a rather limited level of fiscal efficiency. The study employs fixed effect models and dynamic GMM methods to investigate the effect of direct taxation components (personal and corporate income taxes) on economic growth. The analysis also considers the informal economy's role in relation to the official economy. The empirical results revealed that corporate income taxes significantly negatively impact economic growth for both clusters of high- and limited fiscal efficiency countries. Additionally, personal income tax was associated with lower economic growth for countries in the limited fiscal efficiency group. Thus, from the perspective of policymakers, lowering direct taxation can increase disposable income, stimulate consumption and economic growth, encourage investment leading to job creation, increase competitiveness, and reduce tax evasion and avoidance, thereby leading to a more efficient tax system.

The Influence of Taxation on Income Inequality: Analysis of the Practice in the EU Countries

The growing economic inequality around the world is recognized as a global problem of mankind. At the same time, the key tool for reducing inequality and ensuring the achievement of sustainable development goals is the taxation system given its distributive function. That is why this paper puts forward and proves a scientific hypothesis according to which direct taxation has a significant impact on economic inequality, with its scale and sphere depending on the level of economic development and the specific architecture of the tax system adopted in a particular country. The study relies on data from 28 European Union countries, including the United Kingdom, whose tax systems are not identical but harmonized in accordance with European Union directives, the same as the legislation in other economic sectors. Accordingly, it can be concluded that similar institutional characteristics are present. We have used the method of two-stage cluster analysis, which is meant for identifying the natural splitting of the mass of data into groups, then carried out regression analysis and built some models. The contribution of the study is revealing a number of important regularities that are significant for characterizing the dependence of income inequality on direct taxation as well as formulation recommendations for improving the tax policies of European Union countries, with the potential of policy implications. The results obtained can play a significant role in the development and further harmonization of tax systems and resolving the global problem of increased inequality within and between countries.

ASSESSMENT OF THE URBAN FREIGHT REGULATIONS IMPACT ON THE TRANSPORTATION COST

The paper will investigate the impact of the vehicle carrying capacity to which the local tax is applied on forming the cost of delivery. The cost of 1 ton of freight under different tax scenarios is estimated in the paper: without tax 0, with fixed tax - 10% and with progressive tax from 0 to 75%. The greatest effect on reducing the vehicle's load capacity during urban deliveries showed a progressive tax. The developed regression model allows determining the cost of transportation of 1 ton of goods depending on the technological parameters of transport operations, the costs of the transport (logistics) operators to perform these operations, and local tax regulations for transport. The application of the model makes it possible to regulate the use of vehicles of a given capacity by the local administration. In contrast to the strict prohibition on the establishment of traffic signs, the use of a progressive tax by the local administration makes it possible to regulate traffic structure by economic methods. Exploring of influence local tax regulations on transportation will lead to the sustainability of the cities in order to provide GREEN technologies.

The journey to greater equality

[...]examining incomes, along with other variables, is also essential. The crucial role of public activity then transcends capitalism, because when such services are provided by public authorities without basing them on commercial principles in anticipation of profits, this effectively creates a mixed economy. In addition to redistribution, he argues that taxes on inheritance can serve the goal of “predistribution” that inhibit too much intergenerational wealth transfer, once again suggesting that highly confiscatory rates of taxation on individuals have had immense historical success. [...]this is precisely why, in addition to the fiscal policies that he puts so much emphasis on, it is necessary to bring in other regulatory measures and changes in legal codes that would impact predistribution nationally and internationally. [...]low-income and middle-income countries (LMICs) today, which cannot achieve what rich countries can through this progressive fiscal strategy alone, necessarily require other elements of a broader strategy.