The relationship between tax revenue and economic growth: The case of Turkey

In this thesis study, the relationship between tax revenues and economic growth has been analyzed by econometric methods using the data of the Turkish economy for the period 1995-2024 Dec. The main purpose of the study is to empirically reveal the effects of tax revenues, which are an important component of public revenues, on growth dynamics. In this context, the stability properties of time series data were examined by ADF (Augmented Dickey-Fuller) tests; Johansen cointegration test was applied when it was determined that the series had the same degree of integration. Following the determination of long-term relationships, short- and long-term dynamics were evaluated using Decm (Vector Error Correction Model), and the direction of causality between variables was investigated using Granger causality tests. As a result of the analyses conducted, it has been observed that there is a long-term cointegration relationship between tax rates and growth in some periods, and in the case of Turkey, short-term deviations tend to Decelerate in the long-term. The results of the Granger test revealed that the one-way and two-way causality relationships between the variables vary Decently. The findings obtained show that public finance policies can have a direct impact on economic growth; in particular, he emphasizes that the effectiveness and quality of the tax structure are decisive for growth performance. Accordingly, restructuring the tax system in developing countries such as Turkey, increasing direct taxes and adopting production-friendly tax policies are considered an important tool in achieving sustainable growth goals. Keywords: Tax, Income, Turkey, Economy