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Tax Effort: The Impact of Corruption, Voice and Accountability

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  • Richard 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.

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Bibliographic Info

Paper provided by School of Economics and Finance, Queensland University of Technology in its series School of Economics and Finance Discussion Papers and Working Papers Series with number 223.

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Length: 19 pages
Date of creation: 14 Aug 2007
Date of revision:
Handle: RePEc:qut:dpaper:223

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Keywords: Tax effort; tax reforms; developing countries; Latin America; corruption; voice and accountability.;

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References

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  1. Simeon Djankov & Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer, . "The Regulation of Entry," Working Paper 19462, Harvard University OpenScholar.
  2. Richard M. Bird & Jorge Martinez-Vazquez & Benno Torgler, 2004. "Societal Institutions and Tax Effort in Developing Countries," CREMA Working Paper Series 2004-21, Center for Research in Economics, Management and the Arts (CREMA).
  3. Chen, Martha Alter, 2005. "Rethinking the Informal Economy: Linkages with the Formal Economy and the Formal Regulatory Environment," Working Paper Series RP2005/10, World Institute for Development Economic Research (UNU-WIDER).
  4. Jorge Martinez-Vazquez, 2001. "Mexico: An Evaluation of the Main Features of the Tax System," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0112, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  5. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert Vishny, 1998. "The Quality of Goverment," NBER Working Papers 6727, National Bureau of Economic Research, Inc.
  6. Peter Lindert, 2003. "Voice and Growth: Was Churchill Right?," Working Papers 26, University of California, Davis, Department of Economics.
  7. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, 06.
  8. Richard M. bird, 2003. "Taxation in Latin America: Reflections on Sustainability and the Balance between Equity and Efficiency," International Tax Program Papers 0306, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto.
  9. Richard M. Bird, 2014. "Administrative Dimensions of Tax Reform," Annals of Economics and Finance, Society for AEF, vol. 15(2), pages 963-992, November.
  10. Hettich,Walter & Winer,Stanley L., 2005. "Democratic Choice and Taxation," Cambridge Books, Cambridge University Press, number 9780521021807.
  11. Peter Lindert, 2004. "Social Spending and Economic Growth," Challenge, M.E. Sharpe, Inc., vol. 47(4), pages 6-16, July.
  12. Best, Michael H., 1976. "Political power and tax revenues in Central America," Journal of Development Economics, Elsevier, vol. 3(1), pages 49-82, March.
  13. Messere, Ken & de Kam, Flip & Heady, Christopher, 2003. "Tax Policy: Theory and Practice in OECD Countries," OUP Catalogue, Oxford University Press, number 9780199241484, September.
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Citations

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Cited by:
  1. Bin Dong & Uwe Dulleck & Benno Torgler, 2008. "Conditional Corruption," CREMA Working Paper Series 2008-29, Center for Research in Economics, Management and the Arts (CREMA).
  2. Richard Bird & Eric Zolt, 2007. "Tax Policy in Emerging Countries," International Tax Program Papers 0707, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto.
  3. Asongu, Simplice & Jellal, Mohamed, 2014. "International aid corruption and fiscal behavior policy," MPRA Paper 57192, University Library of Munich, Germany.
  4. Asongu, Simplice A & Jellal, Mohamed, 2013. "On the channels of foreign aid to corruption," MPRA Paper 49378, University Library of Munich, Germany, revised 28 Aug 2013.
  5. Gebhard Kirchgässner, 2010. "Tax Morale, Tax Evasion, and the Shadow Economy," University of St. Gallen Department of Economics working paper series 2010 2010-17, Department of Economics, University of St. Gallen.

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