Tax Reforms and Economic Growth: A Longitudinal Analysis of Fiscal Policies, Financial Stability, and Market Competitiveness

Abstract

This paper aims at analyzing the effect of taxes on economic growth, particularly the cross-sectional impact of changes in fiscal policy, financial development and market openness. In this context, the study explores the effects of changes in taxes for a long period of time in order to determine how such changes affect certain economic parameters including GDP growth, income distribution and the markets. Based on theoretical and empirical literature, this paper reveals that tax reforms offer an important tool for private investment, sound fiscal revenue base through the predictable revenue flow, and improved competitiveness by eradicating tax distortions. Overall, they would help the authorities to design well-targeted, broad and annual-based tax reforms that could lead to improved market conditions and macroeconomic stability that could enhance the growth of the economy among other positive effects. Keywords: Tax reforms, economic growth, fiscal policies,