Tax Potential vs. Tax Effort: A Cross-Country Analysis of Armenia's Stubbornly Low Tax Collection

 
Author/Editor: Davoodi, Hamid Reza ; Grigorian, David A.
 
Publication Date: May 01, 2007
 
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
 
Summary: Despite recording double digit growth since 2000, Armenia's tax-to-GDP ratio has been fairly stable at about 14½ percent. This paper catalogues a range of factors that may account for Armenia's stubbornly for tax collection by benchmarking Armenia's tax-to-GDP against some comparator countries and conducting an extensive econometric study of the main determinants of tax collection. We find empirical support for the hypothesis that the persistence of Armenia's low tax-GDP ratio can be traced to persistence of weak institutions and a large shadow economy. The gap between the potential and actual tax collection in Armenia could be as high as 6½ percent of GDP. We conclude with some policy recommendations that, if adopted, can boost revenue buoyancy.
 
Series: Working Paper No. 07/106
Subject(s): Tax collection | Armenia | Shadow economy

Author's Keyword(s): tax potential | tax collection | institutions | shadow economy | Armenia
 
English
Publication Date: May 01, 2007
ISBN/ISSN: 1934-7073 Format: Paper
Stock No: WPIEA2007106 Pages: 38
Price:
US$18.00 (Academic Rate:
US$18.00 )
 
 
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