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Determining countries’ tax effort

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Author Info

  • Carola Pessino

    (Universidad de Torcuato Di Tella)

  • Ricardo Fenochietto

    (Fiscal Affairs Department, International Monetary Fund (IMF))

Abstract

This paper presents a model to determine the tax effort and tax capacity of 96 countries and the main variables from which they depend. The results and the model allow us to clearly determine which countries are near their tax capacity and which are some way from it, and therefore, could increase their tax revenue. Our study corroborates previous analysis inasmuch as the positive and significant relationship between tax revenue as percent of GDP and the level of development (per capita GDP), trade (imports and exports as percent of GDP) and education (public expenditure on education as percent of GDP). The study also demonstrates the negative relationship between tax revenue and inflation (CPI), income distribution (GINI coefficient), the ease of tax collection (agricultural sector value added as GDP percent), and corruption.

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Bibliographic Info

Article provided by IEF in its journal Hacienda Pública Española/Revista de Economía Pública.

Volume (Year): 195 (2010)
Issue (Month): 4 (december)
Pages: 65-87

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Handle: RePEc:hpe:journl:y:2010:v:195:i:4:p:65-87

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Related research

Keywords: tax effort; tax frontier; tax capacity; tax revenue; stochastic tax frontier; inefficiency.;

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References

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  2. Vito Tanzi & Hamid Reza Davoodi, 1997. "Corruption, Public Investment, and Growth," IMF Working Papers 97/139, International Monetary Fund.
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  4. Tanzi, Vito & Zee, Howell H., 2000. "Tax Policy for Emerging Markets: Developing Countries," National Tax Journal, National Tax Association, vol. 53(n. 2), pages 299-322, June Cita.
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  7. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
  8. Terence D. Agbeyegbe & Janet Gale Stotsky & Asegedech WoldeMariam, 2004. "Trade Liberalization, Exchange Rate Changes, and Tax Revenue in Sub-Saharan Africa," IMF Working Papers 04/178, International Monetary Fund.
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  12. Leuthold, Jane H., 1991. "Tax shares in developing economies A panel study," Journal of Development Economics, Elsevier, vol. 35(1), pages 173-185, January.
  13. Abhijit Sen Gupta, 2007. "Determinants of Tax Revenue Efforts in Developing Countries," IMF Working Papers 07/184, International Monetary Fund.
  14. David A. Grigorian & Hamid Reza Davoodi, 2007. "Tax Potential vs. Tax Effort: A Cross-Country Analysis of Armenia's Stubbornly Low Tax Collection," IMF Working Papers 07/106, International Monetary Fund.
  15. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
  16. Pitt, Mark M. & Lee, Lung-Fei, 1981. "The measurement and sources of technical inefficiency in the Indonesian weaving industry," Journal of Development Economics, Elsevier, vol. 9(1), pages 43-64, August.
  17. Howell H. Zee & Vito Tanzi, 2000. "Tax Policy for Emerging Markets - Developing Countries," IMF Working Papers 00/35, International Monetary Fund.
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Citations

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Cited by:
  1. Musharraf Cyan & Jorge Martinez-Vazquez & VIoleta Vulovic, 2013. "Measuring tax effort: Does the estimation approach matter and should effort be linked to expenditure goals?," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1308, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  2. 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.
  3. John Norregaard, 2013. "Taxing Immovable Property Revenue Potential and Implementation Challenges," IMF Working Papers 13/129, International Monetary Fund.
  4. Ivanyna, Maksym & von Haldenwang, Christian, 2012. "A comparative view on the tax performance of developing countries: Regional patterns, non-tax revenue and governance," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 6(32), pages 1-44.
  5. Teresa Ter-Minassian, 2012. "Reform Priorities for Sub-national Revenues in Brazil," Research Department Publications 4772, Inter-American Development Bank, Research Department.
  6. Jaime Alfredo Bonet & Fabio Rueda, 2012. "Esfuerzo fiscal en los estados mexicanos," IDB Publications 64598, Inter-American Development Bank.
  7. Jaime Alfredo Bonet & Fabio Rueda, 2013. "Esfuerzo fiscal municipal en Guatemala," IDB Publications 79878, Inter-American Development Bank.

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