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Political Institutions, State Building, and Tax Capacity: Crossing the Tipping Point

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  • Vitor Gaspar
  • Laura Jaramillo
  • Mr. Philippe Wingender

Abstract

An empirical finding by Gaspar, Jaramillo and Wingender (2016) shows that once countries cross a tax-to-GDP threshold of around 12¾ percent, real GDP per capita increases sharply and in a sustained manner over the following decade. In this paper, we attempt via four case studies—Spain, China, Colombia, and Nigeria—to illustrate that the improvements in tax capacity have been part of a deeper process of state capacity building. We discuss the political conditions that supported tax capacity building, highlighting three important political ingredients: constitutive institutions, inclusive politics and credible leadership.

Suggested Citation

  • Vitor Gaspar & Laura Jaramillo & Mr. Philippe Wingender, 2016. "Political Institutions, State Building, and Tax Capacity: Crossing the Tipping Point," IMF Working Papers 2016/233, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2016/233
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    3. Christine Lewis, 2019. "Raising more public revenue in Indonesia in a growth - and equity-friendly way," OECD Economics Department Working Papers 1534, OECD Publishing.

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