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

Abstract

This study examines the impact of tax and non-tax determinants of corporate income tax (CIT) revenue. By conducting an empirical assessment, this paper seeks to highlight the key determinants currently affecting CIT revenue and their significant role in shaping tax p olicy. For a comprehensive analysis, the research is divided into two parts and examines both tax policy and government economic policy. The principal 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 contribution of this research lies in examining the interaction betwee n tax policy and government economic policy, showing 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 identification of the positive effects of human capital and government governance on CIT revenue. The research proposes a new concept of CIT that aligns with modern business conditions and provides a direction for reforming this tax, aiming to ad dress its divergence and inconsistency globally.