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Assessing the relationship between democracy and domestic taxes in developing countries

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  • Helene Ehrhart

    ()
    (CERDI - University of Auvergne and Banque de France)

Abstract

To what extent differences across developing countries in their domestic tax mobilisation can be explained by their political regime? Using a panel of 66 developing countries over 1990-2005, we found that democracy matters for achieving higher domestic taxes mobilisation. The constraints on the executive are especially of importance to counter the government's propensity to cave in for special interests and be insufficiently welfare minded. Moreover, democracy is specifically needed in natural resource rich countries to make natural resource rents contribute to higher domestic taxes and no longer be an impediment to a sustained tax system.

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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 32 (2012)
Issue (Month): 1 ()
Pages: 551-566

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Handle: RePEc:ebl:ecbull:eb-10-00487

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Keywords: Tax revenue; Democracy; Natural resources; Developing countries; Panel;

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References

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  1. Cesar Calderon & Alberto Chong, 2006. "Do Democracies Breed Rent-seeking Behavior?," Journal of Economic Policy Reform, Taylor & Francis Journals, Taylor & Francis Journals, vol. 9(4), pages 247-260.
  2. Bruno S. Frey & Benno Torgler, 2006. "Tax Morale and Conditional Cooperation," CREMA Working Paper Series, Center for Research in Economics, Management and the Arts (CREMA) 2006-11, Center for Research in Economics, Management and the Arts (CREMA).
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  8. Bird, Richard M. & Martinez-Vazquez, Jorge & Torgler, Benno, 2008. "Tax Effort in Developing Countries and High Income Countries: The Impact of Corruption, Voice and Accountability," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, Queensland University of Technology (QUT), School of Economics and Finance, vol. 38(1), pages 55-71, March.
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  15. Bornhorst, Fabian & Gupta, Sanjeev & Thornton, John, 2009. "Natural resource endowments and the domestic revenue effort," European Journal of Political Economy, Elsevier, Elsevier, vol. 25(4), pages 439-446, December.
  16. Michael Keen & Mario Mansour, 2010. "Revenue Mobilisation in Sub-Saharan Africa: Challenges from Globalisation I - Trade Reform," Development Policy Review, Overseas Development Institute, Overseas Development Institute, vol. 28(5), pages 553-571, 09.
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Cited by:
  1. Yannick Lucotte, 2010. "Adoption of inflation targeting and tax revenue performance in emerging market economies: An empirical investigation," Post-Print, HAL halshs-00505140, HAL.
  2. Yannick Lucotte, 2010. "The choice of adopting inflation targeting in emerging economies: Do domestic institutions matter?," Post-Print, HAL hal-00539713, HAL.
  3. Ivanyna, Maksym & von Haldenwang, Christian, 2012. "A comparative view on the tax performance of developing countries: Regional patterns, non-tax revenue and governance," Economics Discussion Papers 2012-10, Kiel Institute for the World Economy.
  4. Clarisse Nguedam Ntouko, 2013. "Regulatory Framework and Private Investment: Empirical Evidence for Developing Countries," Economics Bulletin, AccessEcon, vol. 33(1), pages 494-510.

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