Authors: Athanasios Kehagias, Ekaterini Lekarakou, Spyridon Goumas

Title: Factors affecting taxation: A classification and trend detection attempt

Abstract

Taxes govern the entire life of individuals as well as legal entities.  They are imposed on almost every activity, with main exponents taxes on income, consumption and property, creating monetary obligations to the state. The estimation, certification and collection of them by the state, give taxes a property character and transform them as the main funding source, covering fiscal, economic and social policy objectives. Taxation performance, and therefore tax revenue, is determined directly by the ability to enforce, pay, and collect as well as indirectly by endogenous and exogenous factors. The tax performance prediction, as well as conditions, future developments and actions related to taxation, should be a priority for both tax legislators (tax policy makers) and taxpayers (tax units). The forecast ability or opportunity, can be based on the identification, synthesis and behavior of various factors involved and influencing taxation, offering over time planning, stability, development and growth. Several literature and empirical studies have been conducted in the past, attempting to identify and document these determinants by examining different time, size, and type, samples. The observation of these samples, as well as the application of different methods, had a catalytic effect on outcomes, leading to a number of similar and conflicting conclusions regarding the impact of factors on taxation. GDP, GDP per capita, trade openness, inflation, public spending, unemployment, demographic aging, corruption, legislation, political instability, public dept, sectoral composition to GDP, etc., were recorded by the scholars as factors correlated with taxation, reflecting the general prevailing notion and trends of the time.

The present study is an attempt to gather and critically analyse surveys, from the early times of investigating these factors in the 1960s, till mature and extensive thinking of today. All factors - variables per study were recorded and classified into five major categories (development, growth, debt, sectoral composition and demographics), taking into account their common characteristics. This categorisation, facilitated the analysis of percentage participation, the distribution over time, as well as the past predominant and nowadays trends.

The results revealed a) that the first studies, from 1961 to 1991, compared to the newer ones, applied and examined limited factors categories, ranged from one to three categories maximum, b) groups of factors such as development and sectoral composition appear over time in almost all surveys, except 1982 and 2008, c) debt category appeared in surveys from 2002 and onwards, d) from early 2000 till now, the presence of all categories seem to be a trend or need, proving in this way, their importance as a whole, but also, the complexity of taxation in now days.