Pak-Japan comparative study of consumption tax (value added tax) and its effects on economic growth rate and gross savings
PDF

Keywords

Consumption tax
VAT
Economic growth
GDP growth
Gross savings.

How to Cite

DAHRI, S. H., SHAIKH, N., & SHAH, P. (2019). Pak-Japan comparative study of consumption tax (value added tax) and its effects on economic growth rate and gross savings. Journal of Economics and Political Economy, 6(3), 295–303. https://doi.org/10.1453/jepe.v6i3.1938

Abstract

Abstract. The purpose of this research attempt is to statistically observe the causal impact of consumption tax (value added tax) on GDP/economic growth and gross savings in Pakistan as well as in Japan and their comparative analysis for the period defined (1989 to 2015). Furthermore, to explore if the increase in value-added tax is either contributing to rising growth rate or increasing gross savings using time series secondary data. It is found through running regression that tax on goods and services (value added tax) maintains significant and healthy/positive association with gross domestic product growth rate and gross saving in Japan and Pakistan also. An increase in value-added tax contributes more to gross savings in Japan and Pakistan than the economic growth rate. The policymakers in Japan and Pakistan need to design policies to increase value-added tax rates to increase gross savings that could be utilized to increase physical and human capital investment to increase more production to achieve sustained economic growth. Also, this study guides Japan and Pakistan policymakers to restrict the export of the primary product to avoid value-added tax loss.

Keywords. Consumption tax, VAT, Economic growth, GDP growth, Gross savings.

JEL. H22, E21, O47.
https://doi.org/10.1453/jepe.v6i3.1938
PDF

References

Alm, J.A.-G. (2012). Value-added taxation and consumption. Tulane University Economics Working Paper, No.1203. [Retrieved from].

Bird, R.M. (2005). Value-added taxes in developing and transitional countries: Lessons and questions. Institute for International Business Joseph L. Rotman School of Management, University of Toronto, Ontario, Canada. [Retrieved from].

Charlet, A., & Buydens, S.. (2012). The OECD international VAT/GST guidelines: Past and future developments. World Journal of VAT/GST Law, 1(2), 175-184. doi. 10.5235/WJOVL.1.2.175

Ebrill, L. K.-P. (2001). The Modern VAT. International Monetary Fund. [Retrieved from].

Emmanuel, U.C. (2013). The effects of value added tax (VAT) on economics growth of Nigeria. Journal of Economics and Sustainable Development, 4(6), 190-201.

Gupta, S. (2017). Good and services tax: Lesson for India from China and Japan. International Journal of Research Culture Society, 1(8), 144-152.

Hassan, B., & Sarker, T. (2012). Reformed general sales tax in Pakistan. International VAT Monitor, 23(6), 417-421.

Hassan, B. (2015). The role of value added tax (VAT) in the economic growth of Pakistan. Journal Economics and Sustainable Development, 6(13), 174-183.

Helgason, A.F. (2017). Unleashing the ‘money machine’: The domestic political foundations of VAT adoption. Socio-Economic Review, 15(4), 797–813. doi. 10.1093/ser/mwx004

Keen, M., & Brockwood, B. (2007). The value added tax: Its causes and consequences. Warwick Economic Research Papers, No.108. [Retrieved from].

Miki, B. (2011). The effect of the VAT rate change on aggregate consumption and economic growth. Center on Japanese Economy and Business, Columbia University, [Retrieved from].

Noor, S.H. (2016). The effect of value add tax on economic growth and its sources in developing countries. International Journal of Economics and Finance, 8(1), 217-228. 10.5539/ijef.v8n1p217

Onji, T.M. (2017). The Sustainability of Japan’s Government Debt: A Review. Kobi University, Kobe, Japan. [Retrieved from].

Oynipreye, A.T. (2016). Impact of value added tax on government revenue and economic growth in Nigeria, International Journal of Management and Applied Science, 2(7), 92-97.

Saleem, M.R. (2013). Budget deficit and economic growth: A case study of Pakistan. Interdisciplinary Journal of Contemporary Research in Business, 5(1), 5(1), 911-926.

Sthanumoorthy, R. (2006). Economic effects of value added tax. The IUP Journal of Public Finance, 4(4), 38-45.

Tassefa, D.K. (2017). Effect of value added tax on consumption and saving pattern in Ethiopia. International Journal for Research in Business, Management and Accounting, 3(5), 17-28.

Tajika, E. (1995). The VAT in Japan. Hitotsubashi Journal of Economics, 36(1), 115-124.

Taufiq, A., Hakim, A.A., & Bujang, I. (2016). Does goods and services tax stimulate economic growth? International evidence, Journal of Business and Retail Management Research, 10(3), 137-146.

Vickneswaran, A. (2016). Value added tax, gross domestic product and budget deficit: A case study of Sri Lanka. ICCM 2015, Faculty of Management Studies and Commerce, University of Jaffna. [Retrieved from].

Zheng, C. (2007). The effect of taxes on saving: Evidence from 29 OECD countries. [Retrieved from].

Creative Commons License
This article licensed under Creative Commons Attribution-NonCommercial license (4.0)

Downloads

Download data is not yet available.