Assessing the Impacts of Direct and Indirect Taxes on Private Investment in Iran

The effects of the tax on economic activities are one of the most important issues in general finance. Taxes are the most important source of revenue for the government, in addition to being an important means of implementing government fiscal policies. Since taxes affect resource allocation, they will have important effects on real economic variables. Therefore, the effects of direct and indirect taxation on private investment have been studied. The method of gathering statistics and data is a library based on time series statistics of 1996-2018, which are derived from the central bank, the effect of government development expenditure, GDP, direct tax, indirect tax, business index, and risk index on investment have been estimated using the ARDL method for the Iranian economy. Government construction expenditure, direct taxation and risk index have a negative relationship with private investment, but GDP, indirect taxes and business index have a positive impact on private investment. Considering the inverse relation between direct tax and private investment as well as the positive relation between indirect tax and private investment, the imposition of tax breaks for direct taxes and an increase of indirect taxes can be effective in encouraging private investment.