Tax Policy: Impact on Business Development and Economic Dynamics of the Country

Abstract

"The optimal system, structure, and effectiveness of the tax system depend on many factors and are characterized by several differences depending on the country’s social and economic development. The purpose of the academic paper is to identify the features of the impact of the EU-27 countries’ tax policy on business development and economic dynamics to determine the differences in this correlation. Methodology. The statistical and regression analysis of the tax structure of the EU-27 countries is used in the scientific article to evaluate its correlation with economic dynamics for the period 2000-2022 based on the average values for the following periods: 2000-2005, 2006-2010, 2011-2015, and 2016-2022. The results demonstrate a slowdown in economic growth in the EU-27 in the long run from 2000 to 2019 and economic growth in 2021 to 2022 with no significant changes in the tax structure. The dynamics of tax revenues were revealed to be stable, despite their different shares in GDP. In general, it is possible to assert a low level of correlation between the share of tax revenues in GDP and the annual GDP growth rate. The established regression model shows only a 9% change in GDP dynamics depending on the change in the share of tax revenues to the budgets of the EU-27 countries. The research has identified three groups of countries by the share of tax revenues, by the share of taxes on income, profit and capital gains, and by the share of taxes on goods and services in the EU-27."