Abstract

The purpose of this paper is to estimate the impact of tax policy on household saving rate using the total tax revenue/GDP ratio, income tax revenue/GDP ratio, social security contribution revenue/GDP ratio and consumption tax revenue/GDP ratio. This paper analyzes the empirical determinants of household saving using data from 17 OECD countries for 1970～2005. The empirical evidence reported in this paper suggests that the negative impact of total taxes, income taxes, and consumption taxes on the household saving rate is compelling and robust. This paper suggests important implication that tax burden should be minimized to promote household saving.

Keywords

• household saving rate
• tax policy
• total tax revenue/GDP ratio
• income tax revenue/GDP ratio
• consumption tax revenue/GDP ratio

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