Description
Title: Evidence from the ARDL Bound Testing Approach on the effects of fiscal effort in Tunisia
Abstract: This study’s goal is to investigate the various structural factors that influence Tunisia’s tax effort and revenue. To estimate the dynamic equation of fiscal potential and its structural and non-structural determinants for the period of 1996–2017 in Tunisia, we used an ARDL model on an empirical study. The empirical findings demonstrate that Tunisia fully utilized its fiscal potential prior to 2010, and the tax effort was greater than unity. This trend was reversed after 2010. Even with higher taxes, Tunisia is not performing to its full potential. The findings demonstrated that Tunisia is having extreme difficulty increasing tax revenue from the same taxpayer base. It is therefore required to focus reform efforts on two areas: expanding the taxpayer base to ensure greater tax fairness and implementing an awareness and motivation strategy designed to increase tax compliance. Tunisia needs to implement reforms to do away with the flat-rate system and set up incentives and procedures to encourage the shift from informal to formal. Finally, it would be sage to tighten regulations on cash payments and guarantee that the relevant laws are followed. Fighting tax evasion and fraud by enhancing the human and material resources made available to the tax administration and consolidating its digitalization efforts would be appropriate, even with a delay in relation to the legislation, in order to optimize the allocation of budgetary resources and lessen the pressure on public finances.
Keywords: fiscal potential; fiscal pressure; structural factors; tax effort
Paper Quality: SCOPUS / Web of Science Level Research Paper
Subject: Economics
Writer Experience: 20+ Years
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