Investigating the Role of Social Capital on Tax Revenues of Iranian Provinces Using Panel Data Approach

Social capital can be considered a set of existing norms of society, which reflects the people’s trust in state institutions and each other. People's confidence in the government affects their decision to pay taxes. Social capital is an index that measures this trust.  The purpose of this study is to test the effect of social capital on tax revenue in provinces of Iran during the period from 2007 to 2015 and for this, the Panel Data method has been used. The innovation of this paper introduces a new way of calculating the social capital index of Iranian provinces. For this purpose, after examining the use of variables and methods for calculating this index, a method has been selected that seems to be compatible with the conditions of the Iranian provinces.  To do so, the Fukuyama method has been used, which is a way of measuring the absence of social capital. The results of this research show that GDP per capita and Gini coefficient have a positive and significant effect on tax revenue of Iranian provinces and three variables, per capita agricultural value added, unemployment rate and social capital index have a negative and significant effect on tax revenue of Iranian provinces.