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Assessing the tax performance of developing countries
TL;DR: In this paper, the authors present an approach to assess the performance of developing countries' tax systems based on aggregated data and country-specific information, which accounts for different development levels and other influencing factors, such as non-tax revenue and governance.
Abstract: Some countries fail to ensure that their citizens and businesses make an appropriate contribution to the financing of public tasks. But not all countries with a low tax ratio automatically fall into this category. This paper presents an approach to assess the performance of developing countries’ tax systems based on aggregated data and country-specific information. Instead of defining general across-the-board criteria, the approach accounts for different development levels and other influencing factors, such as non-tax revenue and governance.
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TL;DR: The tax on immovable property has been characterized as probably the most unpopular among tax instruments, in part because it is salient and hard to avoid as discussed by the authors. But economists continue to emphasize the virtues of the property tax owing to its relatively low efficieny costs, benign impact on growth, and high score on fairness.
Abstract: The tax on immovable property has been characterized as probably the most unpopular among tax instruments, in part because it is salient and hard to avoid. But economists continue to emphasize the virtues of the property tax owing to its relatively low efficieny costs, benign impact on growth, and high score on fairness. It is, therefore, generally considered to be underutilized in most countries. This paper takes stock of the arguments for using real property taxation, and presents an updated data-set for high-and middle income countries to illustrate its use. It also reflects the renewed and widespread interest in property tax reform globally, and discusses the many policy and administrative issues that must be carefully considered as prerequisites for successful property tax reform.
73 citations
TL;DR: In this paper, the authors address vulnerability of revenue to external shocks using export composition to capture economic structure and differentiating countries according to income levels, resource endowments, etc.
Abstract: This paper addresses vulnerability of revenue to external shocks using export composition to capture economic structure and differentiating countries according to income levels, resource endowments...
64 citations
Cites background from "Assessing the tax performance of de..."
...The nature of the political regime may affect revenue by influencing the formulation of tax policies and shaping the capacity of states to enact tax legislation and manage tax systems (von Haldenwang & Ivanyna, 2010)....
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TL;DR: In this paper, the authors reviewed the literature and contributed with some evidence based on the World Values Survey on the drivers of tax morale worldwide, with an emphasis on developing countries, and showed that socio-eco-nomic factors such as age, religion, gender, employment status and educational attainment have a signifi-cant impact on people's levels of tax satisfaction.
Abstract: This paper reviews the literature and contributes with some evidence based on the World Values Surveyonthe drivers of tax morale worldwide, with an emphasis on developing countries. It shows that socio-eco-nomic factors such as age, religion, gender, employment status and educational attainment have a signifi-cant impact on people�s levels of tax morale. In terms of institutional determinants, satisfaction with democ-racy, trust in government and the satisfaction with the quality of public services play an important role inincreasing tax morale. The paper also discusses future directions for research and policy action in this area
57 citations
TL;DR: This article investigated the relationship between political regimes and tax-to-GDP ratio, using a panel dataset of 131 countries and covering the period 1990-2008, and found that the character of the polity affects taxation, but there is no linear trend in favour of democracy.
Abstract: A growing body of literature suggests that political regime type matters in determining taxation. However, research on the relationship of political regimes to taxation yields mixed results. To what extent does the democratic or authoritarian character of the polity impact on the level of taxation? The paper investigates the relationship between political regimes and tax-to-GDP ratio, using a panel dataset of 131 countries and covering the period 1990-2008. Findings suggest that the character of the polity affects taxation, but there is no linear trend in favour of democracy. Rather, the results indicate a U-shaped relationship between polity and tax ratio.
26 citations
Cites background or methods from "Assessing the tax performance of de..."
...…New Zealand 35.22 20.00 Yemen 9.95 7.68 Gabon 10.92 5.89 Nicaragua 16.51 17.58 Zambia 17.62 13.58 Gambia 17.24 7.47 Niger 9.51 13.32 Zimbabwe 20.91 5.16 Georgia 15.12 15.22 Nigeria 8.53 9.58 Germany 36.18 20.00 Norway 42.02 20.00 Sources: von Haldenwang and Ivanyna (2010); Marshall et al. (2010)....
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...2 Winer et al. (2010) present a model which accounts for this effect, and Cheibub (1998) discusses the issue from an investment versus consumption perspective....
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...…1993; Cheibub, 1998; Fauvelle-Aymar, 1999; Piancastelli, 2001; Teera and Hudson, 2004; Ross, 2004; Bird et al., 2004; Kenny and Winer, 2006; von Haldenwang and Ivanyna, 2010; Mkandawire, 2010; Profeta and Scabrosetti, 2010; Timmons, 2010; Ehrhart, 2012), we introduce two categories of…...
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...…government (including subnational levels) and central government tax revenue among lower-middle-income countries was 1.31 per cent of GDP (in those 19 countries that reported both data in the IMF GFS), while in richer countries it was 5.76 per cent (27 countries) (von Haldenwang and Ivanyna, 2010)....
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...…measure we experimented with GDP per capita, which is used in many empirical studies as a proxy for development or welfare levels (for instance, see Cheibub, 1998; Fauvelle-Aymar, 1999; Boix, 2003; Teera and Hudson, 2004; von Haldenwang and Ivanyna, 2010; Timmons, 2010; Mahdavi, 2008; Gupta, 2007)....
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TL;DR: In this article, the authors present an approach to empirically assess the impact of several kinds of shocks on revenue systems in a broad set of countries, and in developing countries in particular.
Abstract: Beyond the general impact of shocks on economic growth there are specific effects of shocks on revenue systems that shape the capacity of governments to react to adverse external events and sustain development expenditure. These effects vary not only with the kinds of shock affecting the economies, but also with the characteristics of these economies (welfare levels, dependence on natural resources, etc.), the political and administrative capacity of states to react to changing situations, and the structure of the tax systems. Shocks do not only affect the level of tax collection, but also the stability and predictability of revenue. The latter is critical with regard to the adaptation to exogenous changes as well as the financial ability of states to recover from adverse external events. This study presents an approach to empirically assess the impact of several kinds of shocks on revenue systems in a broad set of countries, and in developing countries in particular. The study thus contributes to an evidence-based policy of the European Commission aimed at strengthening the capacity of developing countries to absorb external shocks and thereby stabilising development expenditures. In particular, it provides evidence on the vulnerability to external shocks of tax revenues in developing countries and presents policy options to strengthen the resilience of tax systems.
16 citations
References
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TL;DR: The 2009 update of the Worldwide Governance Indicators (WGI) research project, covering 212 countries and territories and measuring six dimensions of governance between 1996 and 2008: Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption as discussed by the authors.
Abstract: This paper reports on the 2009 update of the Worldwide Governance Indicators (WGI) research project, covering 212 countries and territories and measuring six dimensions of governance between 1996 and 2008: Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption. These aggregate indicators are based on hundreds of specific and disaggregated individual variables measuring various dimensions of governance, taken from 35 data sources provided by 33 different organizations. The data reflect the views on governance of public sector, private sector and NGO experts, as well as thousands of citizen and firm survey respondents worldwide. The authors also explicitly report the margins of error accompanying each country estimate. These reflect the inherent difficulties in measuring governance using any kind of data. They find that even after taking margins of error into account, the WGI permit meaningful cross-country comparisons as well as monitoring progress over time. The aggregate indicators, together with the disaggregated underlying indicators, are available at www.govindicators.org.
3,059 citations
Book•
01 Jan 2005
TL;DR: Investing in Development as mentioned in this paper is the capstone volume of the Millennium Project, which brings together the core recommendations of the UN Millennium Project and provides practical investment strategies and approaches to finance them and an operational framework that will allow even the poorest countries to achieve the MDGs within ten years.
Abstract: This Overview is an invaluable summary of the capstone volume Investing in Development, which brings together the core recommendations of the UN Millennium Project, commissioned by UN Director-General Kofi Annan and directed by Jeffrey D. Sachs, one of world?s leading economists. The Overview provides a user friendly introduction to the main volume, which is the official action plan for ending poverty, providing practical investment strategies and approaches to financing them and an operational framework that will allow even the poorest countries to achieve the MDGs within ten years.
1,332 citations
Posted Content•
TL;DR: The latest update of the Worldwide Governance Indicators (WGI) research project, covering 212 countries and territories and measuring six dimensions of governance between 1996 and 2007, is presented in this paper.
Abstract: This paper reports on the latest update of the Worldwide Governance Indicators (WGI) research project, covering 212 countries and territories and measuring six dimensions of governance between 1996 and 2007: Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption. The latest aggregate indicators are based on hundreds of specific and disaggregated individual variables measuring various dimensions of governance, taken from 35 data sources provided by 32 different organizations. The data reflect the views on governance of public sector, private sector and NGO experts, as well as thousands of citizen and firm survey respondents worldwide. The authors also explicitly report the margins of error accompanying each country estimate. These reflect the inherent difficulties in measuring governance using any kind of data. The authors also briefly describe the evolution of the WGI since its inception, and show that the margins of error on the aggregate governance indicators have declined over the years, even though they still remain non-trivial. The authors find that even after taking margins of error into account, the WGI permit meaningful cross-country comparisons as well as monitoring progress over time. In less than a decade, a substantial number of countries exhibit statistically significant improvements in at least one dimension of governance, while other countries exhibit deterioration in some dimensions. These aggregate indicators, spanning more than a decade, together with the disaggregated individual indicators, are available at www.govindicators.org.
1,313 citations
TL;DR: This article developed a framework where "policy choices" in market regulation and taxation are constrained by past investments in legal and fiscal capacity, showing that common interest public goods such as fighting external wars, as well as political stability and inclusive political institutions, are conducive to building state capacity.
Abstract: Economists generally assume that the state has sufficient institutional capacity to support markets and levy taxes. This paper develops a framework where "policy choices" in market regulation and taxation are constrained by past investments in legal and fiscal capacity. It studies the economic and political determinants of such investments, demonstrating that legal and fiscal capacity are typically complements. The results show that, among other things, common interest public goods, such as fighting external wars, as well as political stability and inclusive political institutions, are conducive to building state capacity. Some correlations in cross-country data are consistent with the theory.
734 citations
Book•
01 Feb 2004
TL;DR: In this article, the authors explore why the region suffers from persistent inequality, identify how it hampers development, and suggest ways to achieve greater equity in the distribution of wealth, incomes and opportunities.
Abstract: With the exception of Sub-Saharan Africa, Latin America and the Caribbean has been one of the regions of the world with the greatest inequality. This report explores why the region suffers from such persistent inequality, identifies how it hampers development, and suggests ways to achieve greater equity in the distribution of wealth, incomes and opportunities. The study draws on data from 20 countries based on household surveys covering 3.6 million people, and reviews extensive economic, sociological and political science studies on inequality in Latin America. To address the deep historical roots of inequality in Latin America, and the powerful contemporary economic, political and social mechanisms that sustain it, Inequality in Latin America and the Caribbean outlines four broad areas for action by governments and civil society groups to break this destructive pattern: 1) Build more open political and social institutions, that allow the poor and historically subordinate groups to gain a greater share of agency, voice and power in society. 2) Ensure that economic institutions and policies seek greater equity, through sound macroeconomic management and equitable, efficient crisis resolution institutions, that avoid the large regressive redistributions that occur during crises, and that allow for saving in good times to enhance access by the poor to social safety nets in bad times. 3) Increase access by the poor to high-quality public services, especially education, health, water and electricity, as well as access to farmland and the rural services. Protect and enforce the property rights of the urban poor. 4) Reform income transfer programs so that they reach the poorest families.
559 citations