Investigating the impact of the non-optimal growth of government spending on the inefficiency of the tax-to-government spending index

Dissertation for M.A))

In the field of business management - financial orientation

Abstract

Taxes are considered as the most common and important source of public revenue and one of the most efficient and effective tools of financial policies through which the government can provide many social and welfare services to the people and give direction and necessary direction to many economic and social activities and flows. The tax to government expenditure index (T/G) is one of the most important indicators for assessing the effectiveness of the tax systems of countries. In this regard, the full provision of the government's current expenses from tax revenues is one of the important goals that has always been the focus of the country's economic policymakers. However, the comparison of the ratio of taxes to current expenses of Iran with some countries indicates the weak role of taxes in financing the current expenses of the government. In this research, the factors affecting the ratio of taxes to government expenses and the ways to improve this index are investigated in order to relate the growth rate of government expenses with the growth of tax revenues. In this regard, using the econometric model and the ordinary least squares (OLS) method, the effect of the growth of government expenses on the inefficiency of the tax-to-government expenses index in the Iranian economy is investigated. And the variables of unemployment rate, government expenses, gross domestic product, and oil revenues are used as explanatory variables and the ratio of taxes to government expenses is used as a dependent variable. is entered into the model and the vector autoregression model is used to investigate the causality of the independent variables and the mentioned ratio. The results confirm the existence of a positive and significant relationship between the GDP and the existence of a negative and significant relationship between the unemployment rate and government expenses with the ratio of taxes to government expenditures and show that as long as production is not booming, it is not possible to increase tax revenues and the government faces a decrease in revenues.

Key words: government expenditures, tax revenues, oil revenues, rate Unemployment, Econometrics

-1- Introduction

Taxes are considered as the most common and most important source of public revenue and one of the most efficient and effective financial policy tools through which the government can provide many social and welfare services to the people and give the necessary direction to many economic and social activities and flows. The two main sources of government funding in the recent history of Iran's economy include oil revenues and revenues Accepting the major fluctuations in the oil revenues of the government over the past years and emphasizing that such revenues were mainly exogenous and caused by the oil market policies, taking into account the existing conditions that due to economic sanctions, the highest level of oil revenues fluctuates and severely reduces facilities, he presents this analysis, that the fulcrum and stability of the budget revenues can be tax revenues. Tax systems of countries. In this regard, the full provision of the government's current expenses from tax revenues is one of the important goals that has always been the focus of the country's economic policymakers. However, the comparison of the ratio of taxes to current expenses of Iran with some countries also indicates the weak role of taxes in providing the current expenses of the government. Therefore, in order to create a healthy and dynamic economy, we should try to increase the role of tax revenues to finance the government's expenses, as well as the correct planning to properly spend the government's expenses. 1-2 Statement of the problem: Tax collection is one of the most common ways to finance the government's expenses. Taxes are one of the most important economic infrastructures with a great impact on sustainable growth and development, providing justice. Taxes are one of the effective political tools in establishing economic stability, reallocating economic resources and income distribution. Unfortunately, some people's perception of tax collection is limited to earning more income in order to run government organizations, and what is less paid attention to is that the high share of revenue collected from the sale of oil and the low share of tax collections in the government's income composition, in addition to having unpleasant complications such as the dependence of the country's income on the export of a commodity, has deprived the country's economy of the possibility of using financial instruments. While many economic disturbances can be directed in the right direction by using this tool.

The most important factors affecting the ratio of taxes include the amount of government expenses, existing facilities, incomes.

The most important factors affecting the ratio of taxes include the amount of government expenses, available facilities, non-tax revenues (including borrowing), tax capacity of the country and gross domestic product. Factors affecting tax capacity include factors affecting the ability of individuals to pay taxes and factors affecting the ability of the government to collect taxes.

Since public expenses are determined according to the duties and powers of the government, the amount of expenses cannot be limited due to the lack of income; Because the public duties are not a vector, therefore, the increase in government expenses may encourage the government to increase public revenues, especially tax revenues, and on the contrary, in some circumstances, government expenses may increase due to the increase in tax revenues.

In Iran, after oil revenues, the main source of government income in the way of financing the budget is tax revenues. In countries with natural resources, the government is less dependent on the tax revenues collected from the members of the society in order to finance its expenses. Therefore, it is less careful in carrying out its expenses. According to the tax to government expenses index, to increase the ratio (T/G), on the one hand, we need to increase the tax revenues and on the other hand, control the government's current expenses. Also, according to the second article of the law of the fourth development plan, the government is obliged to increase the share of credits for expenses financed from non-oil revenues. that at the end of the fourth credit development program, government expenses should be fully financed through tax and non-oil revenues. According to the growth trend of tax revenues indicating the proper performance of the Tax Administration, it seems that the excessive increase in government expenses has played a major role in the not very favorable ratio of taxes to current government expenses in Iran. Therefore, in this research, an attempt is made to investigate the factors affecting the tax-to-government expenditure ratio (T/G) and ways to improve this index, as well as to provide legal and practical solutions to relate the growth of government expenditure with the growth of tax revenues. 1-3 The importance and necessity of research: Looking at the written goals of the fourth and fifth development plans as well as the strategic plan of the Iranian Tax Affairs Organization, it is possible to pay attention to taxes as the main source of government revenue and to change the view of oil revenues from the source He observed that the government's income is the nation's capital. This is while the year of the start of the fourth development program coincided with the first year of the vision document of the Islamic Republic of Iran as a document of the national covenant and road map, and it is the most important document in the hands of the country after the constitution.

Based on this document, in the horizon of 1404, Iran will be a developed country, benefiting from health, welfare, proper distribution of income, social justice away from discrimination and poverty, the first economic position in the region, rapid and accelerated economic growth and full employment knows.

But reaching the position and achieving such indicators is impossible without having a prosperous and active tax sector. In other words, achieving the above indicators in the horizon of 1404 is not possible without financing. However, tax is considered the main financial source, and also being a leader in the region can be considered one of the five most important features of the country's tax affairs organization.

That is why in this research we seek to investigate the factors affecting the ratio of taxes to expenses The government, which is one of the useful indicators for comparing Iran's position among the countries of the Indus region, is one of the most important indicators for the realization of the highest goals of the country's tax affairs organization. 1-4 research objectives: Every research in relation to every issue seeks to achieve goals. Index

·         Identifying the role of government expenditure growth in the ineffectiveness of the tax-to-government expenditure index

·          Determining legal and practical solutions to relate the growth of government expenditure with the growth of tax revenues

1-5 research questions:

The basic questions that we seek to answer in this research are:

1