This study aims to provide insight into the mechanism of tax determinants of G-20 group economies to enhance the understanding of the complex interplay between economic, institutional and policy variables for informed decision-makers and governments to devise their strategies accordingly to improve their tax revenue.
The current study used the panel dataset for G-20 nations from 1974 to 2021. The analysis employed the generalized method of moments (GMM) regression to tackle the issue of endogeneity.
The findings depict that the lagged value of tax ratio, trade openness (TO), foreign direct investment (FDI) inflow, financial development, inflation, urbanization rate, GDP per capita growth rate, political rights, and the contribution of manufacturing and service sectors positively enhance the revenue of the governments among G-20 group. Conversely, the life expectancy and corruption level adversely affect the government’s tax efforts.
This study offers significant policy recommendations for governments, academicians and policymakers aiming to enhance taxation revenue within the G-20 nations. The findings emphasize that G-20 governments should prioritize trade liberalization, encourage FDI, advance financial development and strengthen the political rights of their citizens.
To the best of the author’s knowledge, very few studies in the existing literature have specifically examined the determinants of tax revenue for G-20 nations with the selected variables.
