Research Article
Tax Rate Changes: Does It Affect Gross Domestic Product (GDP)?
@INPROCEEDINGS{10.4108/eai.11-9-2024.2354423, author={Ali Fikri and Intan Rakhmawati}, title={Tax Rate Changes: Does It Affect Gross Domestic Product (GDP)?}, proceedings={Proceedings of the 1st Public Sector International Conference, PSIC 2024, 11-12 September 2024, Lombok Island, West Nusa Tenggara, Indonesia}, publisher={EAI}, proceedings_a={PSIC}, year={2025}, month={2}, keywords={gdp individual income tax rates}, doi={10.4108/eai.11-9-2024.2354423} }- Ali Fikri
Intan Rakhmawati
Year: 2025
Tax Rate Changes: Does It Affect Gross Domestic Product (GDP)?
PSIC
EAI
DOI: 10.4108/eai.11-9-2024.2354423
Abstract
Taxes as the country's main source of financing are an important component for increasing or decreasing value of Gross Domestic Product (GDP). However, the influence of the individual income tax level is thought to have a negative effect on individual spending power. This research aims to review whether there is a relationship between the applicable tax rates and economic growth, in terms of GDP. Testing was carried out through a difference test followed by a test of the influence between the level of individual income tax and GDP (y-on-y). Because the results of the normality test found abnormal data, the test was carried out using non-parametric difference tests and correlation tests. As a result, it was found that an increase in individual income tax rates could have the effect of reducing GDP (y-on-y). This is due to reduced people's purchasing power and reduced circulation of money for shopping/consumption.
