An-Najah University Journal for Research - B (Humanities)


This study aims to shed light on the reality of tax revenue and to identify its determinants in Jordan. This is done by analysing the impact of a set of economic and non-economic factors on tax revenue. Economic factors were represented by the real GDP, consumer price index CPI, foreign direct investment FDI, and economic openness, meanwhile, non-economic factors were represented by corruption and amendments to tax laws. In order to achieve its objectives, the study uses a descriptive method in addition to econometric analysis to time-series data for the period (1995-2019) using several models. Three econometric models were constructed: total tax revenue model, sales tax revenue model, and income tax revenue model. The models were constructed by employing the Autoregressive Distributed Lag (ARDL) approach, and depending on the results of standard diagnostic tests. The study found that the real GDP and CPI are the main determinants of tax revenue in Jordan. It also found that corruption has a significant negative impact on tax revenue, on contrast, amendments to tax laws has no clear impact or has insignificant impact on tax revenue. Thus, the study emphasizes the importance of maintaining price stability to reduce tax revenue volatility. Moreover, in order to increase tax revenue, the study recommends the government to stimulate economic growth, fight corruption, and that any suggested amendment to tax laws in the future should be studied more deeply; in order to ensure that its impact will be clearly reflected on tax revenue.