Explanation:

Taxes directly affect the savings of individuals because high taxes erode income, and low taxes help the individual have more savings. If firms pay less taxes, they save more and invest more which affects the aggregate level of investment in the economy. As investment affects the output (GDP), taxes also have an influence over the per capita income and thus the attractiveness of the foreign investors who look for good returns in the economy. Taxes also affect the prices of goods and services as factor cost (production cost) is affected thereby affecting incentives and behaviour of the economic activities, etc.