Title: The relationship between tax revenue and economic growth: an empirical study in Vietnam

Authors: My-Linh Thi Nguyen; Nga Phan Thi Hang; Toan Ngoc Bui; Hoai Thu Ho; Tung Duy Thai

Addresses: Faculty of Finance and Banking, University of Finance – Marketing (UFM), 2/4 Tran Xuan Soan Street, Tan Thuan Tay Ward, District 7, Ho Chi Minh City, Vietnam ' Department of Science Management, University of Finance – Marketing (UFM), 2/4 Tran Xuan Soan Street, Tan Thuan Tay Ward, District 7, Ho Chi Minh City, Vietnam ' Faculty of Finance and Banking, University of Finance – Marketing (UFM), 2/4 Tran Xuan Soan Street, Tan Thuan Tay Ward, District 7, Ho Chi Minh City, Vietnam ' School of Finance, University of Economics Ho Chi Minh City (UEH), 59C Nguyen Dinh Chieu Street, Ward 6, District 3, Ho Chi Minh City, Vietnam ' Faculty of Finance and Banking, Industrial University of Ho Chi Minh City (IUH), 12 Nguyen Van Bao Street, Ward 4, Go Vap District, Ho Chi Minh City, Vietnam

Abstract: This paper focuses on examining the impact of tax revenue on economic growth in Vietnam. In particular, tax revenue is measured through tax revenue ratio or the government's total tax revenue to GDP. The research data were collected on a yearly basis in the period 1990-2019. Through the vector autoregressive (VAR) model, the paper has achieved great success when finding the positive impact of tax revenue (TAX) on economic growth in Vietnam; however, this impact is negative in the long term. Conversely, economic growth has a positive impact on tax revenue with one lag and three lags. In addition, economic growth in Vietnam is affected by domestic savings (SAV), trade openness (OP), government spending (GOV), and domestic investment (CAP); meanwhile, tax revenue is affected by domestic savings (SAV), trade openness (OP), and government spending (GOV). The paper is the first empirical evidence in Vietnam for the relationship between tax revenue and economic growth. Therefore, the research results have important implications for the Government of Vietnam to have a basis to administer tax policies in order to stimulate economic growth in a sustainable way.

Keywords: economic growth; tax policy; tax revenue; Vietnam.

DOI: 10.1504/AAJFA.2023.132957

Afro-Asian Journal of Finance and Accounting, 2023 Vol.13 No.4, pp.434 - 451

Received: 11 Sep 2019
Accepted: 20 Nov 2020
Published online: 22 Aug 2023 *

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