THE ANALYSIS OF THE ECONOMIC IMPACT OF VAT ON THE ECONOMIC GROWTH IN SOUTHERN EUROPE

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By: COSMINA-ȘTEFANIA CHIRICU
JEL: H29, H24
Keywords: indirect taxes, panel data regression, VAT, economic growth rate.

The Southern Region of Europe is economically well-developed with highly industrialized urban areas and with great agricultural potential. The empirical analysis is based on an econometric assessment that measures the impact of the VAT on the rate of economic growth for years between 1996 and 2017. The empirical evidence highlighted a significant positive impact of VAT on economic growth, but a poor and ineffective use of the tax revenues during the period under review. Moreover, evidence revealed relatively high rates of VAT in the countries analyzed, with negative impact on the aggregate consumption and a diminishing effect of the consumer’s income.