The Impact of Customs Taxes on Economic Diversification in Iraq for the Period (2004-2023)

Abstract

Tax policy is an important tool in promoting economic growth and directing resources toward productive sectors. The financial and economic reality in Iraq requires the activation of this tool, especially since the economy relies heavily on oil revenues. This creates an urgent need to diversify the economy and reduce its dependence on oil due to the risks associated with oil price fluctuations. This enhances financial and economic stability, increases the productive base, and enhances the ability to withstand economic shocks. Tax policy is also an important tool in supporting small and medium-sized enterprises, which contribute significantly to job creation, thus reducing pressure on the government sector. It also improves the investment environment by facilitating tax procedures for related types of taxes, which can be a fundamental pillar for achieving sustainable development and enhancing economic stability. The research addresses customs taxes as one of the types of indirect taxes that effectively impact economic diversification. The research aims to measure and analyze the role of customs taxes in economic diversification, by studying the relationship between customs taxes and diversification of economic sectors using the ARDL model to determine the direction of the relationships between variables and to know the mutual role between variables. The estimated model has reached the existence of a long-term equilibrium relationship, and based on the results of the tests we conclude that customs taxes have a prominent role in achieving economic diversification in Iraq.