The relationship between taxation and poverty: An ampirical analysis based on level-1 regions of Türkiye

Poverty is an important problem that has existed throughout history and needs to be solved. Governments have an important role to play in tackling this problem. Taxes are one of the most important fiscal instruments that can play a decisive role in governments' policies towards poverty. The direction of the impact of taxes on poverty may vary depending on the tax policies implemented in the country. In this context, the aim of this study is to examine the relationship between tax burden and poverty on the basis of level-1 regions of Turkey through two models (Model 1: 2006-2020/ Model 2: 2010-2020) with the panel data analysis method. In this study, Beck-Katz (1995) estimator is applied as a method as a result of diagnostic tests. In its most basic definition, the tax burden concept in the analysis refers to the share of tax revenues in GDP. The concept of poverty, based on the definition of relative poverty, refers to those earning less than 60% of a country's average income. The findings of the analysis reveal that an increase in the tax burden reduces poverty. The findings provide evidence of a negative relationship between tax burden and poverty, although the coefficient is limited. These results suggest that the tax policies implemented in Turkey should be revised in a way to affect the poor more positively.