UNIVERSITI TEKNOLOGI MARA CAWANGAN SABAH

Universiti Teknologi MARA (UiTM) Sabah, Kampus Kota Kinabalu, 88997 Kota Kinabalu,
Sabah

FACULTY OF BUSINESS AND ADMINISTRATION

GROUP ASSIGNMENT

Prepared by : HASURAH BINTI ASLAM

(2017275408)

SITI NUR AIN BINTI SANGUT@SALLEH

(2017277148)

Group : BA2503A1

Course Code : ECO541

Prepared for : DR. TAUFIK ABD HAKIM

Date of : 23 NOVEMBER 2018

Submission
1. According to the article “GDP and Tax Revenues-Casualty Relationship in
Developing Countries: Evidence from Palestine”, tax is a vital fiscal policy for the
economy of the state to achieve the economic stability. However, the developing
countries use taxes to develop their economy achievement. The methodology of this
study are secondary data and econometric models. The objective of this study is to
find out the possible relationship between Gross Domestic Product (GDP) and its
components with tax revenues in Palestine over the time period of 1999 to 2014. The
model regression used by the study is The OLS Models. The dependent variable is tax
revenues, while the independent variable is gross national income (GNI).

From this study, we found out that the null hypothesis (H 0) is the Palestinian tax
revenue does not Granger Cause to the Palestinian GDP. While, the alternative
hypothesis (H1) is conversely to H0, which is the Palestinian tax revenue does Granger
Cause to the Palestinian GDP.

General finding of this study is that the Palestinian should improve their investment
condition and their instrument in collecting taxes and also lower their tax
appropriation. Other than that, its government have to manage their action of using up
resources wisely, and increase their expenditure for developing their own government.

To sum up the study, the result indicated that tax revenue do not Granger Cause to
GDP which the final balance has negative trade.
 2.

Dependent Variable: GDP

Method: Least Squares
Date: 11/23/18 Time: 07:57
Sample: 1999 2014
Included observations: 16

Variable Coefficient Std. Error t-Statistic Prob.  

GNI 0.913270 0.011828 77.21495 0.0000

C 42818325 97074886 0.441086 0.6659

R-squared 0.997657    Mean dependent var 6.84E+09

Adjusted R-squared 0.997490    S.D. dependent var 3.26E+09
S.E. of regression 1.63E+08    Akaike info criterion 40.77770
Sum squared resid 3.74E+17    Schwarz criterion 40.87427
Log likelihood -324.2216    Hannan-Quinn criter. 40.78265
F-statistic 5962.148    Durbin-Watson stat 0.629933
Prob(F-statistic) 0.000000
3. Regression Analysis using E-views
a.

ANNUAL_GDP_GROWTH GNI_PER_CAPITA__THOUS
  ____ AND_
Mean 2.06E+09 1.76E+12
Median 20430.64 1.00E+12
Maximum 1.25E+10 1.05E+13
Minimum 873.2871 3.77E+09
Std. Dev. 3.45E+09 2.63E+12

Skewness 1.565775 2.04E+00

Kurtosis 4.440228 6.207664
     
Jarque-Bera 23.2667 52.74469
Probability 0.000009 0
     
Sum 9.68E+10 8.29E+13
Sum Sq. Dev. 5.48E+20 3.18E+26
     
Observations 47 47

b. C.I = 0.95
i) P-value for Annual GDP Growth
P<α = 0.000009<0.95
ii) P-value for GNI per capita
P<α = 0.000001<0.95
c. So, the null hypothesis is rejected (H0).
 d. Conclusion and Recommendation
Therefore, result are significant and accurate and unbiased. We would like to
advise to government of Palestine to impose higher value of taxes. Secondly,
Palestine authority should focus on investment condition. The government also
have to enhance their government expenditure and government consumption
spending for the sake of the development. Lastly, Palestine authority should aim
on impose tax to products that are mostly consumed by high-income group.

References
Anabtawi, R. A. (2016, March). GDP and Tax Revenues - Causality and Relationshipin
Develping Countries: Evidence from Palestine . Retrieved from Research Gate:
https://www.researchgate.net/publication/299473281

Group, W. B. (2018, n.d n.d). The World Bank. Retrieved from West Bank and Gaza:
https://data.worldbank.org/country/west-bank-and-gaza