The impact of developments in the digital economy on tax revenues

This study, which reveals the positive and negative effects of developments in the digital economy on tax revenues, uses data from 2000 to 2021 for the 20 OECD member countries with the highest levels of digitalization. In this context, the impact of digitalization on different types of tax revenues was analyzed with three different models based on the tax classification made by the OECD in the literature. The dependent variables are taxes on income, profits and capital gains, property taxes, and goods and services. The independent variables are digitalization, investments in information and communication technologies and globalization. In the methodology section of the study, horizontal cross-section dependence tests were first applied. Then, a homogeneity test was conducted, considering that the tests may vary depending on whether the slope coefficients are homogeneous or heterogeneous. The test results revealed that the slope parameters are heterogeneous; therefore, second-generation tests were used in this study. The stationarity of the series is tested using the Breitung and Das unit root test. In the next step, Durbin-Hausman panel cointegration test is applied to examine the long-run relationships. Finally, since a long-run cointegration relationship was found between the series, coefficient estimates for these relationships were calculated using the CCE long-run coefficient estimation test for both countries and the entire panel. The study results reveal that the effects of digitalization, investments in information and communication technologies and globalization on income, profits and capital gains, tax revenues on goods and services and tax revenues on property differ across countries.