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Size Does Matter: Technical and Scale Efficiency in Indian State Tax Jurisdictions

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  • Colin Thirtle
  • Bhavani Shankar
  • Puneet Chitkara
  • Somnath Chatterjee
  • Madhu S. Mohanty

Abstract

Data Envelopment Analysis (DEA) is used to measure tax efficiency in 15Indian states from 1980/81 to 1992/93. Tax efficiency is shown to be conditional on state gross domestic product (SDP), agriculture’s share in state SDP,and a poverty index. The considerable remaining efficiency differences areattributable to the small size of some tax jurisdiction rather than to technical inefficiency. Multilateral Malmquist tax indices show that six of the states were consistently efficient, while three were consistently inefficient. Tax efficiency grew at an average annual rate of 3.9% until 1986/87, but growth ceased after that date for all but two states.

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  • Colin Thirtle & Bhavani Shankar & Puneet Chitkara & Somnath Chatterjee & Madhu S. Mohanty, 2000. "Size Does Matter: Technical and Scale Efficiency in Indian State Tax Jurisdictions," Review of Development Economics, Wiley Blackwell, vol. 4(3), pages 340-352, October.
    • Handle: RePEc:bla:rdevec:v:4:y:2000:i:3:p:340-352
    DOI: 10.1111/1467-9361.00099
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    References listed on IDEAS

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    4. Nguyen, Trang T.T. & Prior, Diego & Van Hemmen, Stefan, 2020. "Stochastic semi-nonparametric frontier approach for tax administration efficiency measure: Evidence from a cross-country study," Economic Analysis and Policy, Elsevier, vol. 66(C), pages 137-153.
    5. Elena Villar Rubio & Pedro Enrique Barrilao González & Juan Delgado Alaminos, 2017. "Relative efficiency within a tax administration: The effects of result improvement," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 9(1), pages 135-149, February.
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    7. José Manuel Cordero & Carlos Díaz Caro & Francisco Pedraja Chaparro & Cristina Polo Fernández, 2020. "Tributos cedidos y eficiencia en la gestión tributaria de las Comunidades Autónomas," Hacienda Pública Española / Review of Public Economics, IEF, vol. 232(1), pages 75-112, March.
    8. Day‐Yang Liu & Hsin‐Hsin Yao & Wen‐Min Lu & Cheng‐Hsien Lin, 2020. "Impulse response function analysis of the impacts of land value‐added tax policy on government performance," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(6), pages 1020-1032, September.
    9. Huang, Shwu-Huei & Yu, Ming-Miin & Huang, Ya-Ling, 2022. "Evaluation of the efficiency of the local tax administration in Taiwan: Application of a dynamic network data envelopment analysis," Socio-Economic Planning Sciences, Elsevier, vol. 83(C).
    10. Avellón Naranjo, Blanca & Prieto Jano, María José, 2017. "Los factores determinantes de la eficiencia en la gestión de las Administraciones Tributarias Autonómicas españolas/The Determinants of Efficiency in the Tax Management of the Spanish Regional Tax Adm," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 35, pages 749-776, Agosto.
    11. Luis R. Murillo‐Zamorano, 2004. "Economic Efficiency and Frontier Techniques," Journal of Economic Surveys, Wiley Blackwell, vol. 18(1), pages 33-77, February.
    12. Longjin Chen, 2021. "Tax enforcement interactions among Chinese provinces: A frontier and spatial analysis," Growth and Change, Wiley Blackwell, vol. 52(1), pages 332-348, March.
    13. Juan Aparicio & Jose Manuel Cordero & Carlos Díaz-Caro, 2020. "Efficiency and productivity change of regional tax offices in Spain: an empirical study using Malmquist–Luenberger and Luenberger indices," Empirical Economics, Springer, vol. 59(3), pages 1403-1434, September.
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    15. Shwu-Huei Huang & Ming-Miin Yu & Ming-Shenq Hwang & Yu-Shan Wei & Ming-Huei Chen, 2017. "Efficiency of Tax Collection and Tax Management in Taiwan's Local Tax Offices," Pacific Economic Review, Wiley Blackwell, vol. 22(4), pages 620-648, October.

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