Survey Impact of Petroleum Products Taxation on Economic Growth of Oil Provinces of Iran

Taxation of petroleum products is one of the value-added tax (VAT) which imposed on seven provinces in Iran. Taxation of petroleum products is because oil and petrochemical companies in these provinces generate revenues from the sale of oil, oil extraction, and petrochemical products. This study seeks to provide a comparison between the impact of taxation on petroleum products and direct taxation on economic growths in the mentioned provinces. For this reason, statistics during 2008-2016 together with Panel VAR method are used. Results for impulse-response functions and variance decomposition show that the major origin of the most changes in economic growth rate could traced back to the government expenditure, as well as taxation of petroleum products during the defined period. It also can realize that taxation of petroleum products in the above provinces has a greater impact than direct taxation on economic growth rate.