Impact of Tax Revenue on Economic Growth: A Study of Selected Countries

Abstract

There are two major types of taxes: direct taxes and indirect taxes. In this research paper, for the purpose of comparing these types of taxes in India and Bhutan, we have taken a sample of tax revenue collected under the heads of direct and indirect taxes. This sample ranges from 2004-2005 to 2014-2015. The results show that Bhutan is generating more tax revenue through indirect taxes whereas India is from direct taxes. By comparing the two regression equations and the standardized betas, we come to know that in Bhutan, more revenue is charged by levying indirect taxes where as India is on the opposite side of it. The results of these two types of fiscal policies can be very different and the more the indirect taxes in country, the more will be increasing gap between rich and poor and thus the more will be the exploitation of labor class. In this paper an attempt has been made to analyze the impact of taxation on the economic development of India and Bhutan