Examining the Convergence of the Tax Capacity in the Selected Provinces of Iran Using Spatial Econometrics Approach

Societies and governments have considered tax as one of the most important ways of public financing. Moreover, identifying new tax capacity to improve tax status and to increase tax incomes is assumed substantial. On the other hand, most economists believe that economic status of a country is affected not only by the economic performance of region but also by the adjacent zones. Therefore, ignoring such spatial factors and linkages may negatively affect the performance of that region. Accordingly, convergence and the related subjects are increasingly drawing the attention of more economists. The present study tries to examine the tax capacity convergence among Iran's provinces during 2001-2011 using Spatial Econometrics in MATLAB software. The findings indicate that meaningful and negative coefficient of the lagged dependent variable represents the convergence of the tax to value added (VA) ratio to its long-term path.