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Role of ICT, Governance Quality in Indirect Tax Revenue Productivity: A Comparative Analysis of Two Recent Indirect Tax Regimes in Indian States

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  • Hrushikesh Mallick

Abstract

The study explores the determinants of indirect tax mobilization across various groups of Indian states based on their major, minor categories and more and less industrialized attributes. It observes a strongly positive but differential impact of per capita RGSDP on own tax revenue efforts of various state groups. Information and Communication Technology use is only helping major less and minor more producer states in augmenting their tax revenues, whereas it results in decreased revenues for major more and minor less producing state groups including all the states in a group. This implies use of Information and Communication Technology has been less effective for most Indian states in augmenting their tax revenues. The governance quality results in loss of tax revenues in major and minor less producer states, while it has no effect on major more producer including all minor and all states together. This implies a weak role of governance in taxation. We observe differential impact of tax regimes for different state panels, which has significant policy relevance. JEL Classification: H11, H21, H27, H77

Suggested Citation

  • Hrushikesh Mallick, 2024. "Role of ICT, Governance Quality in Indirect Tax Revenue Productivity: A Comparative Analysis of Two Recent Indirect Tax Regimes in Indian States," South Asian Journal of Macroeconomics and Public Finance, , vol. 13(1), pages 7-38, June.
    • Handle: RePEc:sae:smppub:v:13:y:2024:i:1:p:7-38
    DOI: 10.1177/22779787231210743
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    References listed on IDEAS

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    1. Sacchidananda Mukherjee, 2020. "Goods and Services Tax efficiency across Indian States: panel stochastic frontier analysis," Indian Economic Review, Springer, vol. 55(2), pages 225-251, December.
    2. Keen, Michael & Lockwood, Ben, 2010. "The value added tax: Its causes and consequences," Journal of Development Economics, Elsevier, vol. 92(2), pages 138-151, July.
    3. Kaisa Alavuotunki & Mika Haapanen & Jukka Pirttilä, 2019. "The Effects of the Value-Added Tax on Revenue and Inequality," Journal of Development Studies, Taylor & Francis Journals, vol. 55(4), pages 490-508, April.
    4. Hrushikesh Mallick, 2021. "Do governance quality and ICT infrastructure influence the tax revenue mobilisation? An empirical analysis for India," Economic Change and Restructuring, Springer, vol. 54(2), pages 371-415, May.
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    More about this item

    Keywords

    Governance quality; use of ICT; cost of collection; indirect tax revenue productivity; tax reforms; Indian states;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H27 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other Sources of Revenue
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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