Is government revenue increase research and development activities? If yes then we must say that the there is a positive and significant relation between government tax revenue and economic growth. Need your understandings and suggestions.
Government tax revenue finances all government spending, regardless of their specific nature. Of course, this also includes spending on education as well as research and development. The pattern of spending affects economic growth, but so does the type and structure of taxes levied. Increased tax revenue can result from the built-in flexibility of the tax system alone, because income tax or consumption tax revenue increases as a result of rising income or consumption. However, it also increases if a new type of tax is introduced or the tax rates of existing taxes are increased. If education and research expenditure is increased with this additional tax revenue, this may lead to additional economic growth. However, possible negative effects of the increased tax burden on economic growth must then also be taken into account. Ultimately, the overall effect can only be roughly determined by an empirical analysis in the ex post view. See
https://www.researchgate.net/publication/274363403_Taxes_Tax_Systems_and_Economic_Growth
https://www.researchgate.net/publication/273973721_Impact_of_the_Tax_System-The_Case_of_the_Federal_Republic_of_Germany
https://www.researchgate.net/publication/227351799_Shadow_Economy_Tax_Evasion_and_Transfer_Fraud_-_Definition_Measurement_and_Data_Problems
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