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Tax Effort: The Impact of Corruption, Voice and Accountability

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  • Richard M. Bird
  • Jorge Martinez-Vazquez
  • Benno Torgler

Abstract

In this paper we argue that a more legitimate and responsive state is an essential factor for a more adequate level of tax effort in developing countries. While at first glance giving such advice to poor countries seeking to increase their tax ratios may not seem more helpful than telling them to find oil, it is presumably more feasible for people to improve their governing institutions than to rearrange nature?s bounty. Improving corruption, voice and accountability may not take longer nor be necessarily more difficult than changing the opportunities for tax handles and economic structure. The key contribution of this paper is to extend the conventional model of tax effort by showing that not only do supply factors matter, but that demand factors such as corruption, voice and accountability also determine tax effort to a significant extent.

Suggested Citation

  • Richard M. Bird & Jorge Martinez-Vazquez & Benno Torgler, 2007. "Tax Effort: The Impact of Corruption, Voice and Accountability," CREMA Working Paper Series 2007-13, Center for Research in Economics, Management and the Arts (CREMA).
    • Handle: RePEc:cra:wpaper:2007-13
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    Cited by:

    1. Simplice A. Asongu, Nicholas M. Odhiambo, 2021. "Taxation, foreign aid and political governance in Africa," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 18(2), pages 217-249, December.
    2. Simplice Asongu, 2015. "On Taxation, Political Accountability and Foreign Aid: Empirics to a Celebrated Literature," South African Journal of Economics, Economic Society of South Africa, vol. 83(2), pages 180-198, June.
    3. Asongu, Simplice A. & Adegboye, Alex & Nnanna, Joseph, 2021. "Promoting female economic inclusion for tax performance in Sub-Saharan Africa," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 159-170.
    4. Asongu , Simplice A., 2015. "On the dynamic effects of foreign aid on corruption," European Economic Letters, European Economics Letters Group, vol. 4(1), pages 5-10.
    5. Simplice A Asongu & Jellal Mohamed, 2013. "On the channels of foreign aid to corruption," Economics Bulletin, AccessEcon, vol. 33(3), pages 2191-2201.
    6. Romain Houssa & Kelbesa Megersa, 2017. "Institutional quality, economic development and the performance of VAT," BeFinD Working Papers 0115, University of Namur, Department of Economics.
    7. Asongu Simplice & Jellal Mohamed, 2014. "International aid, corruption and fiscal policy behavior," Working Papers of the African Governance and Development Institute. 14/007, African Governance and Development Institute..
    8. Dong, Bin & Dulleck, Uwe & Torgler, Benno, 2012. "Conditional corruption," Journal of Economic Psychology, Elsevier, vol. 33(3), pages 609-627.
    9. Adegboye, Alex & Asongu, Simplice & Tchamyou, Vanessa & Osinubi, Tolulope & Adeyanju, Ibukunoluwa, 2021. "Educational quality, social media and public accountability: a global perspective," MPRA Paper 111754, University Library of Munich, Germany.
    10. Anita, Mendiratta & Shveta, Singh & Yadav Surendra, S. & Arvind, Mahajan, 2023. "When do ESG controversies reduce firm value in India?," Global Finance Journal, Elsevier, vol. 55(C).
    11. Asongu Simplice, 2014. "Taxation, foreign aid and political governance: figures to the facts of a celebrated literature," Working Papers of the African Governance and Development Institute. 14/022, African Governance and Development Institute..
    12. Asongu, Simplice & Jellal, Mohamed, 2014. "International aid corruption and fiscal behavior policy," MPRA Paper 57192, University Library of Munich, Germany.
    13. Gebhard Kirchgässner, 2011. "Tax Morale, Tax Evasion and the Shadow Economy," Chapters, in: Friedrich Schneider (ed.), Handbook on the Shadow Economy, chapter 10, Edward Elgar Publishing.
    14. Goran Sumkoski, 2018. "Regulation and social capital," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 20(1), pages 152-173, April.

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    More about this item

    Keywords

    Tax effort; tax reforms; developing countries; Latin America; corruption; voice and accountability;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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