Innovation plays a crucial role in the realisation of Sustainable Development Goals (SDGs) because it makes it possible to find creative and sustainable solutions that meet global challenges. However, the relationship between taxation and innovation is not linear and much less simple, as it can depend on various factors, such as the structure of the tax system, government policies, and how tax resources are used. This study aims to review the literature on the effects of taxation on innovation and its implications for achieving the SDGs. In this sense, a literature review was carried out that showed that taxation can have both positive and negative effects on innovation and that high tax rates and complex tax systems can discourage innovation because they reduce companies' financial capacity. The implications for Sustainable Development Goals are significant. Innovation and taxation are determinant factors in achieving the SDGs, as they drive technological advances and enable the development of sustainable solutions to tackle global challenges.
TopIntroduction
The Sustainable Development Goals (SDGs) provide a holistic framework to address global challenges, considering three main dimensions: economic growth, social inclusion, and environmental protection. Several studies emphasize the need for integrated approaches to sustainable development, emphasising the interconnectedness between the goals. For instance, Vandenbergh and Gilligan (2017) argue that actions taken to achieve one goal could have spillovers effects on others. This interconnectedness highlights the importance of a comprehensive and coordinated approach in achieving the goals collectively.
So, innovation plays a crucial role in achieving SDGs because it enables creative and sustainable solutions to be found that are suited to global challenges. According to Kouam and Asongu (2022), innovation enables the creation and implementation of innovative solutions and technologies and the introduction of practices whose aim is to strike a balance between economic development environmental protection, and social welfare.
Nevertheless, the effects of taxation extend beyond financial implications, significantly impacting various aspects of the economy. One such crucial area where taxation can have far-reaching consequences is innovation, a critical driver of sustainable development. Taxation plays a vital role in contributing to the achievement of SDGs (Rahman, 2023).
There is a significant relationship between taxation and the SDGs. The SDGs are a set of global goals adopted by the United Nations in 2015 to create a more sustainable future for all. Overall, taxation is a critical tool for governments to generate funds and redistribute resources necessary for sustainable development. It contributes to several SDGs by mobilizing resources, reducing inequality, financing social services, promoting sustainable consumption, combating illicit financial flows, fostering good governance, and contributing financially to innovation (Giri & Chaparro, 2023).
According to scientific evidence, innovation depends above all on an entrepreneurial environment and tax rules that encourage companies to invest in innovation projects (Weckel, 1983). This study aims to carry out a literature review on the effects of taxation on innovation and its implications for achieving the SDGs.
Several studies emphasise the need for integrated approaches to sustainable development, emphasising the interconnectedness between the goals. For instance, Vandenbergh and Gilligan (2017) argue that actions taken to achieve one goal could have spill over effects on others. This interconnectedness highlights the importance of a comprehensive and coordinated approach to achieving the goals collectively.
The relationship between taxation and innovation is not linear and much less simple, bearing in mind that it may depend on several factors, such as the structure of the tax system, government policies, and how tax resources are used. Thus, taxation can have positive and negative effects on innovation, however, it is a crucial tool used by governments around the world to generate revenue and promote economic stability and sustainable development.
Initially, we will analyse the relationship between taxation and business innovation. Next, we will analyse the effects of taxation on innovation capacity. Finally, we will reflect on the implications of taxation for achieving the SDGs.