Abstract
The main objective of this study was to measure the tax capacity and tax effort in Jordan by using cross-sectional time series data for 59 countries during the period (2000-2017), where the modal was estimated by the least squares method and the normal results of the study, (OLS), the result of the study showed a positive relationship between the tax burden and the share of exports of GDP, while the relationship was inverse with the value added of the manufacturing sector, per capita income and the share of the services sector of GDP. As for the estimated tax effort, the results showed that the data of Jordan were compensated in the estimated standard model where the tax capacity in Jordan in 2017 was about 16.1%, this means that Jordan is close to the upper limits of the tax capacity; in 2017 the tax burden has reached about 15.7%. Taking into account the impact of the procedures that the government has taken since the begging of 2018, especially the sales tax and the special taxes on oil, this means that Jordan is close to the limits of tax exhaustion. The results of the study also showed that the tax effort in Jordan is high, thus means that the category that pays taxes pays more than its capacity taxes, and these counts as an exhaustion on the productive sectors, which negatively affects the competitiveness. The study recommended the importance of the effective utilizing of tax capacity for individuals and for the economy and maintains acceptable levels of tax effort and not to exceed these levels.
Highlights
The subject of tax capacity and tax effort is of great importance in modern financial studies, in the search of the optimum size of tax revenues, based on achieving the principle of equity that takes into account the economical, financial and social conditions of society, based on that the performance of the tax structure and its ability to increase tax revenues are assessed
In Jordan, the importance of domestic revenues, especially taxation, has emerged in recent years, and this interest has increased due to several factors, and the most important factor is the continuous decline in external grants and the permanent deficit in the budget, which affected the ability of the Jordanian economy to grow
The results of the analysis showed the following: a) There is a positive relationship between the tax burden and the share of exports in GDP. b) While the relationship was inverse between both the tax burden and the added value of the manufacturing sector and the per capita or per capita income and the service sector share of GDP. c) Jordan is close to the upper limits of tax capacity, as the tax burden in 2017 was about 15.7%, and if the impact of the measures has been considered by the government since the beginning of the year 2018, especially sales tax and special taxes on oil, this means that Jordan is close to tax fatigue. d) Jordan's tax effort is high
Summary
The subject of tax capacity and tax effort is of great importance in modern financial studies, in the search of the optimum size of tax revenues, based on achieving the principle of equity that takes into account the economical, financial and social conditions of society, based on that the performance of the tax structure and its ability to increase tax revenues are assessed. In Jordan, the importance of domestic revenues, especially taxation, has emerged in recent years, and this interest has increased due to several factors, and the most important factor is the continuous decline in external grants and the permanent deficit in the budget, which affected the ability of the Jordanian economy to grow. Individuals always seek to evade taxes because they believe the burden is huge This is mainly due to the low per capita income and the low level of tax awareness, because it is one of the topics that concern the mobilization and allocation of financial resources available for the implementation of programs and projects that the government seeks to implement with the growing sense in many Arab countries that the financing role of taxes is no longer appropriate to meet their ambitions, which made many of themove towards reforming and developing their tax systems. The results were extracted using the Eviews program, using Jordan’s data in the estimated model for obtaining the amount of tax capacity and tax effort in Jordan
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