Effect of Value Added Tax (VAT) on Public Sector’s Economy Stability in Iran (with Promoting Ethics and Tax Culture Approach)

Background: Value added tax as an indirect tax is one of the effective sources of government tax revenue and the study of its economic effects is the focus of many economic studies. Therefore, the purpose of this article is to investigate the effect of VAT on the stability of the public sector economy in Iran with the approach of promoting tax ethics and culture. Method: The present study was applied and among descriptive-relational researches. The statistical population of quarterly and tax data during the years 1393-1389 was the information of the Central Bank of the Islamic Republic of Iran. In this study, due to the selection of macroeconomic variables, the whole statistical population was considered as a statistical sample and collected using a checklist. Data analysis was performed using autoregressive pattern method with ARDL distributive interval. Results: Two models were presented in this regard: in the first model, the variable value added tax (VAT) with a coefficient of -0.71 at an error level of 1% had a negative and significant effect on budget deficit fluctuations. In the second model, the value added tax coefficient was -0.49 at the 1% error level and had a negative effect on tax revenue fluctuations in the current period. Conclusion: The results of estimating the research models indicate that VAT is effective and useful in providing and stabilizing the public sector economy by reducing tax fluctuations and government budget deficit fluctuations in Iran. By consolidating and expanding the activities of the public sector, the issue will lead to greater welfare for the general public as well as improving the culture and tax ethics in the country.