Analysis of the Effect of Tax Fairness and Complexity on Economic Welfare in Iran

The tax system provides the necessary financial resources for the administration of the country to use the collected resources for the welfare of the majority of the society and the improvement of public infrastructure; Therefore, the survival of the political and administrative system of any country requires the existence of an efficient tax system. In this regard, the aim of the current research is to analyze the effect of tax complexity and fairness on economic welfare in Iran in the period 1977 to 2021, and using the linear and non-linear ARDL method, the research model has been estimated in two symmetric and asymmetric formats. For this purpose, tax complexity was calculated using the Harishman-Herfindahl index and economic well-being with the combined index of economic well-being. The moving trend of the economic welfare index shows that the welfare fluctuates during the period under review. The average welfare index in the first and Sixth program has decreased compared to the previous period and has been increasing in the following periods and has an average of 40.62. The average complexity and fairness of taxation in the first, fifth and sixth plans have decreased compared to their previous sub-periods. The long-term results in the symmetric model show that the complexity tax is associated with the adverse effect for economic well-being, but tax fairness does not have a significant effect on economic well-being. In an asymmetric model, tax fairness has a direct and asymmetric effect on economic well-being; In such a way that the size of the positive effect of reductions in tax fairness on economic well-being is greater than increases in it. Tax complexity is also associated with an asymmetric effect on economic well-being. In such a way that only increases in tax complexity have an adverse effect on economic well-being. Inflation and unformal exchange rate have a negative effect on economic well-being, and per capita income has a positive effect on economic welfare. Also, in the years after the revolution until the end of the war and the years after the Joint Comprehensive Plan of Action, the level of economic well-being has decreased. According to the results, it is suggested that the government consider policies such as simplifying tax laws, creating a comprehensive and developed tax information system, reducing the cost of tax collection and imposing a tax on total income, and increasing the tax knowledge of taxpayers and tax experts, reforming put the tax system and diversity in tax bases on the agenda.