Examining the relationship between growth, development and tax revenues for European Union countries using panel data analysis method

Tax is the free-of-charge transfer of compulsory economic units or values determined according to the government's economic power to the public to meet public expenditures by the individuals and institutions that make up the society. European Union (EU) countries haveformed an economic and monetary union within the framework of the Maastricht Agreement. However, the size of the public sector of member countries, the public income-expenditure balance, and fiscal policy practices can differ. For governments, fiscal policies play an important role in creating sustainable and high growth. In this regard, this study aims to comprehensively examine the relationship between tax revenues and economic growth and development for EU countries. In this context, the empirical part of the thesis examines the relationship between direct/indirect taxes as % of GDP per capita, human development index, and sustainability index for 27 EU countries in the 2009-2021 period using panel data analysis.The existence of a long-term relationship in the mentioned data was determined by the Westerlund cointegration test. As demonstrated in the article, the results of the dynamic panel data model show that indirect/direct taxes positively affect growth. On the other hand, the higher coefficient showing the effects of indirect taxes indicates that the effect of indirect taxeson economic growth is relatively greater.