Measuring the Impact of Taxes and Fees on Economic Growth in the Kingdom of Saudi Arabia. An Applied Study

This study aimed to measure the impact of taxes and fees on economic growth in the Kingdom of Saudi Arabia and to examine the long-term relationship between non-oil government revenues and GDP. The researchers employed a comprehensive analytical methodology, including the Johansen cointegration test, unit root tests, and threshold regression analysis. The results indicated the existence of a long-term equilibrium relationship between taxes and economic growth, showing that increases in non-oil revenues are associated with higher GDP. The threshold regression model identified two governing regimes for this relationship: Regime 1: When revenues are below the threshold of 11.04, a 1% increase in taxes leads to a 0.17% increase in GDP. Regime 2: When revenues exceed the threshold of 11.04, the same 1% increase in taxes results in a 0.23% rise in GDP. These findings suggest that taxes and fees positively contribute to economic growth, with the model explaining 82.5% of the variation. Based on these results, the study recommends increasing taxes on non-essential goods while directing the additional revenues toward government investment expenditure to promote sustainable economic development.