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Determinants of tax revenues: Evidence from a sample of Lower Middle Income countries

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  • Boukbech, Rachid
  • Bousselhamia, Ahmed
  • Ezzahid, Elhadj

Abstract

Our goal in this paper is to explore the determinants of tax revenues in developing countries. After reviewing the main determinants discussed in economic literature, two models are estimated in a panel including 29 lower middle income countries over the period 2001-2014. The first concerns the tax capacity and the second the tax effort. The results show that per capita GDP and the value added of agriculture are significantly and positively correlated with tax revenues. The degree of openness has a positive but insignificant effect on tax revenues. The impact of population growth rate is negative but not significant. For the determinants of tax effort, the impacts of inflation and public spending are significant and positive. The relationship between the tax effort and the variables "public aid received" and "foreign debt" is significantly negative.

Suggested Citation

  • Boukbech, Rachid & Bousselhamia, Ahmed & Ezzahid, Elhadj, 2018. "Determinants of tax revenues: Evidence from a sample of Lower Middle Income countries," MPRA Paper 90268, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:90268
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    References listed on IDEAS

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    2. Leanora Alecia Brown & Jorge Martinez-Vazquez, 2015. "International Debt Forgiveness: Who Gets Picked and Its Effect On The Tax Effort Of Developing Countries," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1504, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
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    4. M. Nagy Eltony, "undated". "The Determinants of Tax Effort in Arab Countries," API-Working Paper Series 0207, Arab Planning Institute - Kuwait, Information Center.
    5. Jean-Louis COMBES & Gérard CHAMBAS & Jean-François BRUN, 2006. "Recettes publiques des pays en développement. Méthode d’évaluation," Working Papers 200611, CERDI.
    6. Jean-Paul Azam & Shantayanan Devarajan & Stephen A. O'Connell, 1999. "Aid dependence reconsidered," CSAE Working Paper Series 1999-05, Centre for the Study of African Economies, University of Oxford.
    7. Garg, Sandya & Ashima Goyal & Rupayan Pal, 2014. "Why tax effort falls short of capacity in Indian states: A Stochastic frontier approach," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2014-032, Indira Gandhi Institute of Development Research, Mumbai, India.
    8. Ms. Janet Gale Stotsky & Ms. Asegedech WoldeMariam, 1997. "Tax Effort in Sub-Saharan Africa," IMF Working Papers 1997/107, International Monetary Fund.
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    Cited by:

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    4. Monge, Manuel & Poza, Carlos & Borgia, Sofía, 2022. "A proposal of a suspicion of tax fraud indicator based on Google trends to foresee Spanish tax revenues," International Economics, Elsevier, vol. 169(C), pages 1-12.

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    More about this item

    Keywords

    Tax revenues; tax capacity; tax effort; developping countries;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy

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