THE EFFECTS OF TAX BURDEN ON ECONOMIC GROWTH: AN EMPIRICAL ANALYSIS OF PROVINCES IN TURKEY (2005-2014)

In this study, the existence of the short and long-term relationships between tax burden and economic growth is examined in the sample of provinces in Turkey. In this context, tax burden (accrual-collection) and gross domestic product per capita data are used for 81 provinces covering the period 2005-2014. According to the analyses, there is a long-run cointegrated relationship between tax burden and economic growth. Error correction models show that provinces are structurally convergence to each other in the long run. It also reveals that while 1 percent increase in the tax burden will decrease the rate of economic growth by 0.6 percent in the short term, it increases by 0.9 percent in the long term. Findings obtained in the study contribute to the literature by examining the effects of tax burden on growth rate both short and long term