This study examines the long-run and short-run effects of direct and indirect taxes on income distribution in Türkiye using annual data for the period 1988–2024. Income inequality is represented by the Gini Index, while direct and indirect taxes are measured as a percentage of GDP. Real GDP growth, inflation, and unemployment rates are included in the analysis as control variables. The empirical analysis employs the Augmented Dickey-Fuller (ADF) and Kwiatkowski-Phillips-Schmidt-Shin (KPSS) unit root tests, the Autoregressive Distributed Lag (ARDL) bounds testing approach, and the Toda-Yamamoto causality test. The results reveal the existence of a long-run cointegration relationship among the variables. In the long run, indirect taxes have a statistically significant effect on reducing income inequality, whereas direct taxes do not exhibit a significant redistributive effect. The causality analysis identifies a unidirectional causal relationship running from Gini coefficient to indirect taxes. These findings suggest that the redistributive impact of taxation in Türkiye depends not only on the composition of tax revenues but also on the fiscal mechanisms through which these revenues are transformed into public expenditures and social policy interventions.
Durucan et al. (Wed,) studied this question.