The Determinants of Tax Revenues: Empirical Evidence from Jordan

The purpose of this study is to identify the determinants of tax revenues (TXR) in Jordan. The study covered the period (1990-2019) and used ARDL Bound test for co-integration, ARDL Long Run form, and ARDL Error Correction regression to examine the study hypotheses. The results of the bound test and co-integration equation (CointEq1) shows that there exists a long run relationship between (INDUST, LPCI, FD, FAID, GE, OPEN) and (TXR) in Jordan. The analysis results revealed that per capita GDP, fiscal deficit and government expenditure have a positive significant impact on tax revenues in the short run and long run. While, Foreign aids has a negative significant impact on tax revenues. Industrial sector Value added and economic openness have a positive significant impact in the short run while having a positive insignificant impact on tax revenues in the long run. The results explore that per capita GDP, fiscal deficit, foreign aids and government expenditure are good determinants for tax revenues in the short run as well as in the long run, while industrial sector value added and economic openness are good determinants in the short run. The findings suggest a reduction in government expenditure due to the upward trend in the fiscal deficit and public debt, and the continued increase in (GE) leading to more internal and external imbalances.