How Do Tax Policy and Government Economic Policy Affect CIT Revenue? An Empirical Analysis

Abstract

This study measures the impact of specific tax and non-tax corporate income tax (CIT) revenue determinants. By conducting an empirical assessment, this paper seeks to highlight the key determinants currently affecting CIT revenue and their significant role in shaping tax policy. For a comprehensive analysis, the research is divided into two parts and involves the examination of both tax policy and economic government policy. The principle objective of this research is to determine how tax policy and government economic policy affect CIT revenue in selected countries. Using panel regression models, the analysis includes data from the EU Member States for the period 2000-2020. The data sources were drawn from the databases of the European Commission, Eurostat, the World Bank, and Transparency International databases. The contribution of this research lies in examining the cohesion between tax policy and government economic policy, proving that in addition to tax determinants, non-tax determinants also significantly impact CIT revenue. A particular contribution of the empirical part of the research is the detection of the positive effects of human capital and government governance on CIT revenue. The research has generated proposals for a new concept of CIT that aligns with modern business conditions and provides a direction for reforming this tax, aiming to address its divergence and inconsistency globally.