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Tax Effort: The Impact of corruption, Voice and Accountability

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  • Richard Bird
  • Jorge Martinez-Vazquezb
  • Benno Torgler

    ()
    (Richard Bird, International Tax Program, Rotman School of Management,and Institute of Municipal Finance, Munk Centre for International Studies, University of Toronto, Jorge Martinez-Vazquezb, Andrew Young School of Policy Studies, Georgia State University, Benno Torgler, The School of Economics and Finance, Queensland University of Technology, Australia Richard Bird, Professor Emeritus of Economics and Senior Fellow, Institute of Municipal Finance and Governance.)

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 opporunities 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 International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto in its series International Tax Program Papers with number 0702 Classification - JEL: H110, H200, O170.

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Date of creation: 2007
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Handle: RePEc:ttp:itpwps:0702

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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. Djankov, Simeon & La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2001. "The Regulation of Entry," Working Paper Series, Harvard University, John F. Kennedy School of Government rwp01-015, Harvard University, John F. Kennedy School of Government.
  2. Chen, Martha Alter, 2005. "Rethinking the Informal Economy: Linkages with the Formal Economy and the Formal Regulatory Environment," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) RP2005/10, World Institute for Development Economic Research (UNU-WIDER).
  3. Peter Lindert, 2004. "Social Spending and Economic Growth," Challenge, M.E. Sharpe, Inc., vol. 47(4), pages 6-16, July.
  4. Messere, Ken & de Kam, Flip & Heady, Christopher, 2003. "Tax Policy: Theory and Practice in OECD Countries," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780199241484, October.
  5. Peter Lindert, 2003. "Voice and Growth: Was Churchill Right?," Working Papers, University of California, Davis, Department of Economics 26, University of California, Davis, Department of Economics.
  6. 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, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University paper0112, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  7. Richard M. bird, 2003. "Taxation in Latin America: Reflections on Sustainability and the Balance between Equity and Efficiency," International Tax Program Papers, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto 0306, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto.
  8. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 15(1), pages 222-79, April.
  9. Richard M. Bird & Jorge Martinez-Vazquez & Benno Torgler, 2004. "Societal Institutions and Tax Effort in Developing Countries," International Center for Public Policy Working Paper Series, at AYSPS, GSU, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University paper0406, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  10. 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, Springer, vol. 9(2), pages 131-165, 06.
  11. Richard M. Bird, 2003. "Administrative Dimensions of Tax Reform," International Tax Program Papers, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto 0302, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto, revised May 2003.
  12. Best, Michael H., 1976. "Political power and tax revenues in Central America," Journal of Development Economics, Elsevier, Elsevier, vol. 3(1), pages 49-82, March.
  13. Hettich,Walter & Winer,Stanley L., 2005. "Democratic Choice and Taxation," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521021807.
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Cited by:
  1. Simplice A Asongu & Jellal Mohamed, 2013. "On the channels of foreign aid to corruption," Economics Bulletin, AccessEcon, vol. 33(3), pages 2191-2201.
  2. Dong, Bin & Dulleck, Uwe & Torgler, Benno, 2012. "Conditional corruption," Journal of Economic Psychology, Elsevier, Elsevier, vol. 33(3), pages 609-627.
  3. Richard Bird & Eric Zolt, 2007. "Tax Policy in Emerging Countries," International Tax Program Papers, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto 0707, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto.
  4. Gebhard Kirchgässner, 2010. "Tax Morale, Tax Evasion, and the Shadow Economy," University of St. Gallen Department of Economics working paper series 2010, Department of Economics, University of St. Gallen 2010-17, Department of Economics, University of St. Gallen.
  5. Asongu, Simplice & Jellal, Mohamed, 2014. "International aid corruption and fiscal behavior policy," MPRA Paper 57192, University Library of Munich, Germany.
  6. Asongu Simplice & Jellal Mohamed, 2014. "International aid, corruption and fiscal policy behavior," Working Papers 14/007, African Governance and Development Institute..

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