The Impact of Some Economic Variables on the Tax Burden in Libya: An Econometric Study for the Period 1990–2023

Abstract

This study aimed to investigate the impact of selected economic variables—namely oil revenues, inflation, government expenditure, and gross domestic product (GDP)—on the tax burden in Libya during the period 1990–2023. The study employed the Autoregressive Distributed Lag (ARDL) model. The results revealed that oil revenues have a negative impact on the tax burden, indicating that an increase in oil revenues reduces reliance on taxes. However, inflation, government expenditure, and GDP showed no significant effect on the tax burden, suggesting a weak and unstable relationship between these variables and the tax burden over the study period. The study concludes that in the absence of economic diversification and due to the heavy dependence on oil revenues, the effectiveness of the tax system in Libya is highly influenced by macroeconomic variables. It recommends improving the tax system by developing tax legislation in line with the nature of the Libyan economy.