TITLE:
The Optimal Tax Rate: An Empirical Assessment in Congo
AUTHORS:
Toussaint Armel Bakala
KEYWORDS:
Optimal Tax Rate, Effective Tax Rate, Public Spending, Republic of Congo
JOURNAL NAME:
Open Journal of Business and Management,
Vol.12 No.2,
March
28,
2024
ABSTRACT: This article is intended to be an empirical
assessment of the optimal tax rate in Congo. The objective pursued by this
research work is to determine this optimal tax rate and, therefore, to check
whether there is a gap between the effective tax rate and the optimal tax rate,
in which case, a correction through fiscal policy is necessary. By adapting
Armey’s model to the context of the Congolese economy, it turned out that the
optimal tax rate is 17.20%, well below the effective tax rate of 22.5% of
non-oil GDP. If the latter seems more in
line with the indicators of the Millennium Development Goals (MDGs) and the Sustainable Development Goals (SDGs), it nevertheless appears prohibitive, because it is likely to generate distortions greater than the positive
externalities of public expenses.