Investigating the capacity and tax effort in terms of GDP with oil and without oil in Iran

Getting rid of volatile and unreliable revenues from the sale of crude oil and financing government expenditures through tax revenues is one of the key goals of the tax system in the Iranian economy. To achieve this goal, increasing the efficiency of the tax system and increasing tax revenues can be effective and efficient as a suitable solution to reduce the dependence of the country's economy on oil revenues. This study examines the affecting factors on tax effort in Iran during the period 1978 to 2016. To doing the research used multiple linear regression model and for this purpose, tax capacity functions were determined to determine the tax capacity and then the amounts of tax effort. The ratio of tax revenue to GDP as a dependent variable and from the ratio of value added of agricultural sector to GDP, ratio of value added of services to GDP, ratio of value added of industry to GDP, inflation rate, urban population have been used as model independent variables in GDP with Oil and non-oil separate models. The research data was extracted from the Internet system of the Central Bank, Iran Statistics Center and other sites of international organizations such as the World Bank, the International Monetary Fund and the United Nations and its related sub-organizations. The results showed that the variable of the ratio of the agricultural sector to GDP has a negative relationship with tax capacity and tax effort; the reason is the existence of extensive tax exemptions in this sector. Also, the variables of the ratio of the industry and services to GDP have a positive relationship with tax capacity and effort.