TAX REVENUES AND ECONOMIC EFFICIENCY

Abstract

This article investigates the intricate relationship between tax revenues and economic efficiency, using Uzbekistan as a case study within a broader global context. It highlights that while taxation is a fundamental tool for public finance, the structure, transparency, and administrative quality of a tax system significantly influence its economic outcomes. Drawing on classical and modern public finance theories, as well as recent OECD and World Bank data, the study explores how broadening the tax base, minimizing distortions, and improving voluntary compliance can enhance both revenue generation and allocative efficiency. Uzbekistan’s recent fiscal reforms—such as the digitalization of tax services, simplification of tax codes, and introduction of online systems—have led to notable improvements in tax collection, with an 18.4% increase between 2021 and 2023. However, challenges remain, including a large informal sector, sectoral imbalance in tax contributions, and regional disparities in compliance behavior. The discussion reveals that expanding the reach of taxation to underrepresented sectors like agriculture and informal services, while strengthening the link between tax revenues and public services, is essential for long-term fiscal sustainability. By analyzing both theoretical foundations and empirical evidence, the article concludes that efficient tax systems must focus not only on revenue maximization but also on simplicity, equity, and public trust to ensure inclusive and sustainable economic development.