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Article
Publication date: 8 May 2018

Metri Fayez Mdanat, Manhal Shotar, Ghazi Samawi, Jean Mulot, Talah S. Arabiyat and Mohammed A. Alzyadat

The purpose of this paper is to analyze the impact of tax structures on economic growth in Jordan over the period 1980-2015 using error correction techniques. It provides…

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Abstract

Purpose

The purpose of this paper is to analyze the impact of tax structures on economic growth in Jordan over the period 1980-2015 using error correction techniques. It provides empirical evidence that the tax structure itself, comprising direct taxes, indirect taxes and total tax revenues, is an insufficient indicator for policymakers, whereas when each tax was included separately in the model, it was found that income tax, corporate taxes and personal taxes influenced per capita income growth negatively and that all of them were distortionary taxes. They greatly reduced both short and long-term per capita growth, while tariffs and consumption taxes were found to influence per capita income growth positively. The study also shows that relying heavily on increasing total taxes without taking into consideration the tax structure of the country would lead to a reduction in per capita income, in contrast to other tax structures that showed positive and neutral effects on per capita income. Tax reform and shifting from income taxes toward consumption taxes and tariffs would therefore enhance the well-being of individuals and increase their share of output.

Design/methodology/approach

This study uses an analytical approach in the framework of an error correction model. This approach allows us to overcome many problems in time series data such as non-stationary, serial correlation and endogeneity of variables, which have been ignored in many published studies dealing with time series data.

Findings

The analysis shows that consumption and tariffs have a positive effect on per capita gross domestic product growth, whereas income taxes negatively influenced this growth measure. This implies that attention must be paid to a preference for consumption and tariffs to provide sustained growth. The authors recommend that the government objective should shift from raising revenues to achieving social justice and efficiency.

Research limitations/implications

There are two main limitations inherent this study. The first limitation in regard to the missing data in the series for labor force and average years of schooling, interpolation method used to overcome this shortage. While the second limitation is about the importance of the tax structure itself and its direct impact on such patterns of investment which have been considered but within narrow limits.

Practical implications

The relationship between taxes and economic growth is a controversial aspect of economics, because of its high impact on the decisions made by individuals and institutions, along with its direct influence on the economy as a whole. The authors recommend that the Jordanian government’s objective should shift from raising revenues to achieving social justice and efficiency. Furthermore, Jordan’s weak tax performance and ineffective tax structure indicate the importance for policymakers of focusing more closely on enhancing future per capita growth, which can be done by shifting from income tax toward consumption and trade taxes. On another level, policymakers can reform the tax structure in favor of long-run growth by addressing the importance of consumption taxes and trade taxes in their policies, rather than increasing tax rates.

Social implications

The character of growth is more important than its magnitude. Economic growth should be reflected in the alleviation of poverty reduced inequality and ultimately better living standards. Additionally the authors believe that sustained economic growth can be achieved only if it is broadly based and inclusive. This implies the need to generate jobs for the growing workforce and the adoption of policies to protect and cater for the vulnerable segments of the population. Otherwise economic policy will fail to achieve its objectives.

Originality/value

This study assists policymakers in understanding the relationship between the various types of taxes and economic growth. In particular, the relation between the unique tax structure and growth drivers. This is the first study to analyze tax structure and economic growth in Jordan.

Details

EuroMed Journal of Business, vol. 13 no. 1
Type: Research Article
ISSN: 1450-2194

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Article
Publication date: 26 August 2014

Muhammed S. Alnsour, Bandar Abu Tayeh and Mohammed Awwad Alzyadat

The purpose of this paper is to explore the application of the SERVQUAL approach to assess the quality of service of Jordanian telecommunication sector and how this can ultimately…

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Abstract

Purpose

The purpose of this paper is to explore the application of the SERVQUAL approach to assess the quality of service of Jordanian telecommunication sector and how this can ultimately affect customer loyalty. Service quality has a very high importance in a sector that is becoming highly competitive.

Design/methodology/approach

The paper uses a survey to asses the service quality from the viewpoint of customers using a stratified sample that consists of customers of each of Jordanian Telecommunication Company. The survey contrasts respondents’ expectations of a service with their perceptions of the service delivered by telecommunication companies.

Findings

The study showed that the telecommunications company needs to understand the Jordanian customer expectations in the light of the unique cultural traits of these customers. This affects that companies’ ability in meeting customer expectations, Loyalty is directly enhanced by achieving service quality and should be one of the main goals for telecom companies.

Research limitations/implications

Some of the findings cannot be generalized across industries or across countries.

Practical implications

The paper will be of interest to Jordanian telecommunication firms to academics investigating the reliability and value of service quality assessment tools.

Originality/value

This study showed that culture can have an impact on customers’ expectations of service quality. This is reflected by the findings about responsiveness and tangibility. Responsiveness was found to be the dimension that has the greatest impact on loyalty within the Jordanian culture, while tangibility has the lowest correlation with loyalty.

Details

International Journal of Commerce and Management, vol. 24 no. 3
Type: Research Article
ISSN: 1056-9219

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