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Fiscal Reform and its Firm-Level Effects in Eastern Europe and Central Asia

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  • John E. Anderson

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Abstract

This paper reports the first empirical evidence that fiscal reform efforts in transition countries have positive effects. Using the EBRD BEEPS I and II data, reported in 1999 and 2002, rigorous econometric models are estimated showing that the share of bribes paid to tax collectors is reduced in countries with more extensive fiscal reforms. This effect controls for selection bias in the likelihood that firms are required to make unofficial payments to tax authorities. On the basis of this evidence, we now have some confidence in the success of fiscal reform efforts. In addition, we have insight regarding what forms of fiscal reform may be more successful as the share of revenues generated from direct taxes (both personal and corporate) has an impact on tax bribes.

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File URL: http://www.wdi.umich.edu/files/Publications/WorkingPapers/wp800.pdf
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Bibliographic Info

Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number wp800.

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Length: pages
Date of creation: 01 Aug 2005
Date of revision:
Handle: RePEc:wdi:papers:2005-800

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Keywords: Fiscal reform; Bribery; Transition economies; Eastern Europe; Central Asia;

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References

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  1. Vahram Stepanyan, 2003. "Reforming Tax Systems," IMF Working Papers 03/173, International Monetary Fund.
  2. Henri Lorie, 2003. "Priorities for Further Fiscal Reforms in the Commonwealth of Independent States," IMF Working Papers 03/209, International Monetary Fund.
  3. Richard E. Ericson, 1991. "The Classical Soviet-Type Economy: Nature of the System and Implications for Reform," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 5(4), pages 11-27, Fall.
  4. George C. Tsibouris & Vito Tanzi, 2000. "Fiscal Reform Over Ten Years of Transition," IMF Working Papers 00/113, International Monetary Fund.
  5. Clifford Gaddy & Barry W. Ickes, 1998. "To Restructure or Not to Restructure: Informal Activities and Enterprise Behavior in Transition," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan 134, William Davidson Institute at the University of Michigan.
  6. Jorge Martinez-Vazquez & Robert McNab, 1997. "Tax Systems in Transition Economics," 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 paper9701, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  7. Martinez-Vazquez, Jorge & McNab, Robert M., 2000. "The Tax Reform Experiment in Transitional Countries," National Tax Journal, National Tax Association, vol. 53(n. 2), pages 273-98, June.
  8. Shleifer, Andrei & Vishny, Robert W, 1994. "Politicians and Firms," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 109(4), pages 995-1025, November.
  9. John E. Anderson, 2003. "Tax Offsets or Netting Operations in Post-Soviet Public Finance," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., M.E. Sharpe, Inc., vol. 39(3), pages 27-41, May.
  10. Kaufmann, Daniel & Kraay, Aart & Zoido-Lobaton, Pablo, 1999. "Governance matters," Policy Research Working Paper Series 2196, The World Bank.
  11. repec:rus:hseeco:130396 is not listed on IDEAS
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Cited by:
  1. David Joulfaian, 2009. "Bribes and Business Tax Evasion," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 6(2), pages 227-244, December.
  2. Christopher Gerry & Tomasz Mickiewicz, 2006. "Inequality, Fiscal Capacity and the Political Regime: Lessons from the Post-Communist Transition," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan wp831, William Davidson Institute at the University of Michigan.

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