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A Review of critical issues on tax design and tax administration in a global economy and developing countries

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  • Mattéo Godin

    (CRED, University of Namur)

  • Jean Hindriks

    (CORE, Université Catholique de Louvain)

Abstract

The mobilization of domestic tax resource has become a key issue for developing countries. In this report, we provide some facts and figures on the levels and structures of taxation around the world with special attention to Low Income Countries, (LICs). We use the new ICTD database covering 203 countries with 40 tax items over the period 1980-2010. We discuss some principles of tax design in a global economy that are relevant for LICs. We also review some critical issues on corruption and compliance to see how they relate to growth and tax evasion. We then provide a benchmark framework to assess the overall performance of the government tax collection. We use the tax effort index that measures the gap between the potential tax and the actual tax. The novelty of this tax effort index is twofold. First it takes into account spatial variables to capture the geographic dependence. Second it breaks down the tax effort analysis into different tax items to capture the possible tax shift. We conclude with a full ranking of tax effort for all countries and some suggestions of tax reform for a subset of countries that are targeted by the Belgian Development Cooperation.

Suggested Citation

  • Mattéo Godin & Jean Hindriks, 2015. "A Review of critical issues on tax design and tax administration in a global economy and developing countries," BeFinD Working Papers 0107, University of Namur, Department of Economics.
  • Handle: RePEc:nam:befdwp:0107
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    More about this item

    Keywords

    Corporate taxation; efficient tax administration; tax enforcement; source-based and destination based taxation; origin and destination principles;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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