The Impact of Tax Structure on Domestic Savings: An Empirical Evidence from Turkey Provinces

Tax structure and composition in tax systems affect economic behaviors such as consumption, savings, investment directly or indirectly. The aim of the study is to reveal the effect of direct and indirect taxes on savings at the provincial level in Turkey between 2006-2018 using panel data analysis. The results show that there are two-way causal relationships between direct taxes, indirect taxes, and savings. Long-term effects have shown that direct taxes affect savings negatively, while indirect taxes affect savings positively. Remarkable long-term findings indicate that tax policy and tax structure should be taken into account for savings policies in Turkey.