Journal of
Economics and International Finance

  • Abbreviation: J. Econ. Int. Finance
  • Language: English
  • ISSN: 2006-9812
  • DOI: 10.5897/JEIF
  • Start Year: 2009
  • Published Articles: 338

Full Length Research Paper

Estimating the growth-maximizing tax rate for Cote d’Ivoire: Evidence and implications

Yaya Keho
Ecole Nationale Supérieure de Statistique et d’Economie Appliquée (ENSEA) Abidjan-Côte d’Ivoire. 08 BP 03 Abidjan 08, Côte d’Ivoire.
Email: [email protected]

  •  Accepted: 07 July 2010
  •  Published: 30 September 2010

Abstract

 

This paper investigates the optimal tax burden for the Ivorian economy. To address this issue, the empirical analysis was conducted using both Scully and quadratic regression models and annual data covering the period from 1960 to 2006. These models suggest that the growth-maximizing tax rate is in the range of 21.1 to 22.3% of GDP. At that tax rate, the economic growth rate would be around 6.2% instead of the actual 3.2%. The actual low tax rates are shown to be responsible for substantial losses in growth and tax revenues.

 

Key words: Tax rate, economic growth, government revenue.