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Tax Effort: The Impact of Corruption, Voice and Accountability

Author

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  • Richard Bird

    ()

  • Jorge Martinez-Vazquez

    ()

  • Benno Torgler

    ()

Abstract

In this paper we argue that a more legitimate and responsive state is an essential factor for a more adequate level of tax effort in developing countries. While at first glance giving such advice to poor countries seeking to increase their tax ratios may not seem more helpful than telling them to find oil, it is presumably more feasible for people to improve their governing institutions than to rearrange nature’s bounty. Improving corruption, voice and accountability may not take longer nor be necessarily more difficult than changing the opportunities for tax handles and economic structure. The key contribution of this paper is to extend the conventional model of tax effort by showing that not only do supply factors matter, but that demand factors such as corruption, voice and accountability also determine tax effort to a significant extent.

Suggested Citation

  • Richard Bird & Jorge Martinez-Vazquez & Benno Torgler, 2007. "Tax Effort: The Impact of Corruption, Voice and Accountability," School of Economics and Finance Discussion Papers and Working Papers Series 223, School of Economics and Finance, Queensland University of Technology.
  • Handle: RePEc:qut:dpaper:223
    as

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    References listed on IDEAS

    as
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    3. 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.
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    Cited by:

    1. Dong, Bin & Dulleck, Uwe & Torgler, Benno, 2012. "Conditional corruption," Journal of Economic Psychology, Elsevier, vol. 33(3), pages 609-627.
    2. Asongu , Simplice A., 2015. "On the dynamic effects of foreign aid on corruption," European Economic Letters, European Economics Letters Group, vol. 4(1), pages 5-10.
    3. Simplice Asongu, 2015. "On Taxation, Political Accountability and Foreign Aid: Empirics to a Celebrated Literature," South African Journal of Economics, Economic Society of South Africa, vol. 83(2), pages 180-198, June.
    4. Richard M Bird & Eric M Zolt, 2008. "Tax Policy in Emerging Countries," Environment and Planning C, , vol. 26(1), pages 73-86, February.
    5. Gebhard Kirchgässner, 2011. "Tax Morale, Tax Evasion and the Shadow Economy," Chapters,in: Handbook on the Shadow Economy, chapter 10 Edward Elgar Publishing.
    6. Asongu Simplice & Jellal Mohamed, 2014. "International aid, corruption and fiscal policy behavior," Working Papers 14/007, African Governance and Development Institute..
    7. Simplice A Asongu & Jellal Mohamed, 2013. "On the channels of foreign aid to corruption," Economics Bulletin, AccessEcon, vol. 33(3), pages 2191-2201.
    8. Asongu, Simplice & Jellal, Mohamed, 2014. "International aid corruption and fiscal behavior policy," MPRA Paper 57192, University Library of Munich, Germany.
    9. Asongu, Simplice, 2014. "Taxation, foreign aid and political governance: figures to the facts of a celebrated literature," MPRA Paper 63792, University Library of Munich, Germany.

    More about this item

    Keywords

    Tax effort; tax reforms; developing countries; Latin America; corruption; voice and accountability.;

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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