This paper investigates the relationship between taxation and economic growth in Côte d’Ivoire. For this, we use data from 1961 to 2006 and a two-stage modelling technique to control for unobserved non-tax growth determinants. We find that increases in the tax burden and the share of direct tax to total tax revenue are strongly associated with decreases in economic growth, with an excessive tax burden being much more damaging than the share of direct tax. We estimate a growth-maximising tax structure over the sample period and find a time-varying tax burden with a period mean of 11.4%, and a time-varying direct tax ratio having a period mean of 12.9%. A move to a growth-maximising tax structure would generate an increase in real GDP, but would yield a reduction in tax revenues.
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