IDEAS home Printed from https://ideas.repec.org/a/pid/journl/v49y2010i4p405-417.html
   My bibliography  Save this article

The Effect of Corruption and Governance on Tax Revenues

Author

Listed:
  • Tahseen Ajaz

    (University of Wah, Wah Cant)

  • Eatzaz Ahmad

    (, Quaid-i-Azam University, Islamabad)

Abstract

Developing countries face a number of institutional problems in the process of revenue generation. One of the main problems is the corruption in tax administration. The second main problem of low revenue generation is the low quality of governance. This study analyses the effect of institutional and structural variables (corruption and governance) on tax revenues using a panel data set for 25 developing countries over the period 1990-2005. The GMM regression results show that corruption has an adverse effect on tax collection, while good governance contributes to better performance in tax collection. It is further observed that institutional variables have a significant effect on tax revenues.

Suggested Citation

  • Tahseen Ajaz & Eatzaz Ahmad, 2010. "The Effect of Corruption and Governance on Tax Revenues," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 49(4), pages 405-417.
  • Handle: RePEc:pid:journl:v:49:y:2010:i:4:p:405-417
    as

    Download full text from publisher

    File URL: http://www.pide.org.pk/pdf/PDR/2010/Volume4/405-417.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. John Thornton & Fabian Bornhorst & Sanjeev Gupta, 2008. "Natural Resource Endowments, Governance, and the Domestic Revenue Effort; Evidence from a Panel of Countries," IMF Working Papers 08/170, International Monetary Fund.
    2. Odd-Helge Fjeldstad, 2005. "Corruption in Tax Administration: Lessons from Institutional Reforms in Uganda," CMI Working Papers WP 2005: 10, CMI (Chr. Michelsen Institute), Bergen, Norway.
    3. Bird, Richard M. & Zolt, Eric M., 2008. "Technology and Taxation in Developing Countries: From Hand to Mouse," National Tax Journal, National Tax Association, vol. 61(4), pages 791-821, December.
    4. Imam Patrick Amir & Jacobs Davina, 2014. "Effect of Corruption on Tax Revenues in the Middle East," Review of Middle East Economics and Finance, De Gruyter, vol. 10(1), pages 1-24, April.
    5. Joshua Aizenman & Yothin Jinjarak, 2008. "The collection efficiency of the Value Added Tax: Theory and international evidence," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 17(3), pages 391-410.
    6. Sanyal, Amal & Gang, Ira N & Goswami, Omkar, 2000. "Corruption, Tax Evasion and the Laffer Curve," Public Choice, Springer, vol. 105(1-2), pages 61-78, October.
    7. Chand, Sheetal K. & Moene, Karl O., 1999. "Controlling Fiscal Corruption," World Development, Elsevier, vol. 27(7), pages 1129-1140, July.
    8. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
    9. Richard M. Bird & Jorge Martinez-Vazquez & Benno Torgler, 2014. "Societal Institutions and Tax Effort in Developing Countries," Annals of Economics and Finance, Society for AEF, vol. 15(1), pages 301-351, May.
    10. Dani Rodrik, 1998. "Why Do More Open Economies Have Bigger Governments?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 997-1032, October.
    11. Alm, James & Bahl, Roy & Murray, Matthew N, 1991. "Tax Base Erosion in Developing Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 39(4), pages 849-872, July.
    12. Fjeldstad, Odd-Helge & Tungodden, Bertil, 2003. "Fiscal Corruption: A Vice or a Virtue?," World Development, Elsevier, vol. 31(8), pages 1459-1467, August.
    13. Antonio Acconcia & Marcello D'Amato & Riccardo Martina, 2003. "Tax Evasion and Corruption in Tax Administration," Public Economics 0310001, EconWPA.
    14. John Brondolo & Frank Bosch & Eric Le Borgne & Carlos Silvani, 2008. "Tax Administration Reform and Fiscal Adjustment; The Case of Indonesia (2001-07)," IMF Working Papers 08/129, International Monetary Fund.
    15. Besley, Timothy & McLaren, John, 1993. "Taxes and Bribery: The Role of Wage Incentives," Economic Journal, Royal Economic Society, vol. 103(416), pages 119-141, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lien, Nguyen Phuong, 2015. "The impact of institutional quality on tax revenue in developing countries," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 5(10), pages 181-195, October.
    2. repec:eco:journ1:2017-04-55 is not listed on IDEAS

    More about this item

    Keywords

    Public Economics;

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pid:journl:v:49:y:2010:i:4:p:405-417. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Khurram Iqbal). General contact details of provider: http://edirc.repec.org/data/pideipk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.