Taxation serves as a fundamental source of government revenue, playing a crucial role in the economic structure of any country. Developing countries, including Iran, face an urgent need for increased tax revenues to fund government expenditures on public programs and services. Therefore, establishing an optimal combination of tax types is essential for sustainable financing and its positive impact on economic growth. This study aims to investigate the effect of tax composition (the contribution of different tax revenues) on economic growth across various provinces in Iran from 2011 to 2020. Using the Fully Modified Ordinary Least Squares (FMOLS) method in EViews version 12, the results indicate that the composition of tax revenues has a significant negative impact on economic growth in these provinces. Specifically, income tax, consumption and sales tax, corporate tax, and wealth tax negatively affect economic growth. Conversely, import taxes show a significant positive effect on growth. Additionally, variables such as population and foreign direct investment positively influence economic growth, while inflation exhibits a significant negative relationship with growth. Therefore, economic policymakers should take measures to promote economic prosperity by increasing import taxes and reducing income and consumption taxes.
Fard et al. (Sat,) studied this question.
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