## _wp07270

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---

### Tax structure and revenue levels
- Countries with little or no hydrocarbons (Lebanon, Morocco, Jordan, Tunisia, and Egypt) have a share of nonhydrocarbon tax revenues of over 20 percent of GDP.
- Hydrocarbon-producing countries tend to have a large share of government expenditure to GDP (30 to 40 percent) but most have a low share of nonhydrocarbon revenues of about 10 percent of GDP.
- For countries with no (Morocco and Jordan) or limited hydrocarbons (Egypt, Tunisia, and Syria) the ratio of nonhydrocarbon taxes to nonhydrocarbon GDP is about 25 percent; for countries with large hydrocarbon reserves, the ratio tends to be less than 5 percent.
- Lebanon is an outlier with relatively high average income per person and relatively low tax rates.
- Region-wide observations:
  - The Middle East is not, by commonly accepted standards, highly taxed relative to other regions at similar income levels.
  - The rising number of free trade agreements (FTAs) within the region will eliminate an important source of tax revenues.
  - Hydrocarbon revenues are highly volatile and will eventually run out, requiring replacement by other revenues.
- Fiscal sustainability recommendation:
  - Diversify tax revenues away from hydrocarbons, taking into account future government expenditures driven by population growth.

### Structural and administrative constraints on taxation
- Large agricultural and service sectors are often informal and reliant on low-income day laborers paid irregularly, reducing the formal tax base.
- Low quality of tax administration in relation to income has led many Middle East countries to rely predominantly on a few easy-to-tax sources, such as foreign trade taxes.
- Political economy factors constrain direct taxation:
  - Raising revenues from direct taxation depends on the size and strength of the middle class.
  - In low-income countries the poor have little taxable income and the rich and large enterprises can lobby for low tax rates and exemptions.
  - Indirect taxation (including trade taxes) often becomes a main source of government revenue because it can be implemented with relatively less political cost.

### Empirical study: scope, data, and specification
- Novelty: first study to examine the effect of corruption on revenues from individual taxes rather than total tax revenues.
- Time period: 1990–2003.
- Countries analyzed (12): Algeria, Bahrain, Egypt, Jordan, Lebanon, Morocco, Oman, Sudan, Syria, Tunisia, United Arab Emirates, and Yemen.
- Dependent variables: nonhydrocarbon tax revenue relative to nonhydrocarbon GDP for individual taxes including:
  - (i) all taxes together
  - (ii) taxes on income, profit, and capital gains
  - (iii) taxes on individuals
  - (iv) corporate and other enterprise taxes
  - (v) taxes on payroll and workforce
  - (vi) taxes on property
  - (vii) taxes on goods and services
  - (viii) taxes on excise and taxes on specific services
  - (ix) international trade taxes
  - (x) customs and other import duties
  - (xi) taxes on exports
  - (xii) social contribution taxes
- Independent variables: Real income per capita (ln), share of agriculture in GDP, openness, inflation (CPI), corruption.
- Corruption proxy: International Country Risk Guide (ICRG) Corruption Index rescaled so index ranges from 0 to 10 and multiplied by minus one so higher values mean more corruption.
- Estimation method: system-GMM panel estimator to address endogeneity and omitted variable bias; country effects (ηij) and time effects (μtj) included.
- Rationale for nonhydrocarbon normalization: using non-hydrocarbon taxes to non-hydrocarbon GDP is deemed a better measure for the taxation level of the population.

### Key econometric findings
- Sargan tests for overidentifying restrictions produced large p-values across cases, suggesting instruments are acceptable.
- Income elasticity:
  - Most tax revenues are not very responsive to changes in nonhydrocarbon income.
  - Taxes on individuals are statistically significantly affected by income changes.
- Agriculture share:
  - Overall, a larger share of agriculture in GDP is associated with lower total tax revenue.
  - Exceptions: taxes directly related to the agricultural sector and higher income taxes in countries with higher agricultural shares.
- Openness and inflation:
  - Degree of openness and inflation do not have a systematic effect on most taxes.
  - Openness is generally insignificant for most taxes; trade-related taxes may behave differently.
  - The Tanzi effect (real tax erosion from inflation) is not generally apparent; inflation impacts are often positive on collected taxes in the sample.
- Corruption (aggregate vs. disaggregated results):
  - Corruption does not have a statistically significant impact on total tax revenues in the Middle East.
  - Disaggregated analysis: corruption has a pronounced negative and statistically significant effect on taxes that require frequent interactions between tax authorities and private agents:
    - Taxes on exports: negative and statistically significant effect from corruption.
    - Customs and other import duties: negative and statistically significant effect from corruption.
    - International trade taxes: negative and statistically significant effect from corruption.
    - Taxes on excise and taxes on specific services: negative and statistically significant effect from corruption.
  - Direct taxes on corporations and individuals show little or only marginal significance with respect to corruption, possibly due to:
    - Introduction of Large Taxpayer Offices (LTOs) targeting easily monitored large taxpayers.
    - The overall low level of direct taxes leading to higher compliance.
  - Indirect taxes (property taxes, taxes on goods and services) generally do not show statistically significant effects from corruption, possibly because they affect formal activity with relatively transparent accounts.

### Explanations for corruption’s impact on trade- and excise-related taxes
- Trade and excise taxes are more vulnerable to corrupt practices because:
  1. Outdated legislation with rate differentiations and exemptions.
  2. Outdated tax administration requiring extensive physical inspection and frequent interactions between officials and traders.
  3. High traders’ costs of complying with border formalities (about 27 percent of the value of the shipment). Corrupting underpaid border guards with discretionary power can, for instance, avoid delays in clearance, which can add an estimated 10 percent in costs alone.
- Customs administration reforms have seen improvements in strategy, law, procedures, and information technology in many countries, but organizational structure and institutional processes conducive to integrity and effectiveness have hardly improved.
- Evidence from customs modernization features across selected Middle East countries shows variation in improvements in custom strategy, custom law, procedures, post-release verification, organization, and information technology usage.

### Policy implications and recommendations
- Diversify the tax base away from hydrocarbons to maintain long-term fiscal sustainability, because:
  - The region is not highly taxed relative to peers at similar income levels.
  - FTAs within the region will reduce trade tax revenues.
  - Hydrocarbon revenues are volatile and finite; population growth implies future expansion of government spending requiring more revenues.
- Strengthen tax administration to increase nonhydrocarbon tax revenues in both hydrocarbon and nonhydrocarbon producing Middle East countries.
- Prioritize reforms in areas where corruption most reduces revenue:
  - Modernize customs and border procedures to reduce frequent discretionary interactions and physical inspection requirements.
  - Simplify and update legislation to remove rate differentiations and exemptions that create rent-seeking opportunities.
  - Implement institutional and organizational reforms that enhance integrity and reduce opportunities for corruption in customs and excise collection.
  - Expand and modernize Large Taxpayer Offices (LTOs) and targeted compliance in direct taxation to capture easily monitored tax bases.
- Recognize that as FTAs reduce trade-tax revenues, reforms to domestic tax systems and broader tax-base diversification are urgent.

### Findings on the incidence and impact of corruption
- Corruption at the customs level "hurts not only tax revenues but also the capacity to trade."
- Trade taxes as a share of GDP are "not very large in the Middle East compared to other regions" but their yield "appears to be heavily affected by corruption."
- The rising number of FTAs, by reducing tax revenues, "are themselves likely to diminish the effect of corruption."
- Empirical caveats:
  - Tax reforms in the Middle East between "1990 and 2003" may have caused structural breaks not fully captured by the regressions.
  - Panels are "not fully balanced," so for some taxes in certain countries for some years observations are sparse, making inference hazardous.
  - The lack of statistical significance of the corruption variable for some taxes does not necessarily imply no effect on revenue-generating capacity.

### Administrative reforms and incentive measures
- Reinforce administrative capacity by "reforming the structure of the revenue system."
- Pay administrators more: "Paying administrators more will also reduce the attraction of corruption."
- Hire and train professional staff; strengthen internal control systems; change incentives within revenue administration.
- Combine decent pay with "an effective sanction system, which might differentiate between different types of corruption."
- Modernize tax administration to reduce personal contacts and increase automated procedures:
  - "Mail and telephone communication should be the norm rather than personal contacts."
  - Use computerized systems whenever possible and "implement a system for auditing computerized systems to detect fraudulent changes to programs or files."
  - Example: "if tax compliance certificates are required by law, they should be issued automatically by the computer system."
- Simplify the tax system to reduce discretion and opportunities for corruption:
  - Few rates, few exemptions, readily determinable taxable bases, easy-to-calculate tax liabilities.
  - Broad use of withholding, presumptive income schedules, minimum taxes, and clear rules.
  - "Tax officials should have little discretion."

### Transparency measures and external initiatives
- Transparency reduces incentives to solicit bribes: "If the press can report corruption, officials will have less incentive to solicit bribes because the probability and costs of getting caught are likely to be higher."
- Make hydrocarbon-sector revenues reported by companies available to the public, for example by subscribing to the Extractive Industries Transparency Initiative (EITI).
  - EITI (launched in "2002") requires companies (including state-owned resource companies) to report aggregate payments to government and government to publish aggregate payments it has received, so discrepancies are transparent.
  - "EITI reporting guidelines and reporting templates for country governments and international and national companies have been drafted."

### Constraints, political economy, and implementation challenges
- Fighting institutional corruption "depends on one critical factor: the political commitment of the country's highest authorities to do so."
- None of the reforms to raise tax revenues or reduce corruption "can be easily implemented."
- The Middle East has experienced both successes and setbacks in past economic reforms; corruption "probably cannot be fully eliminated, it must be reduced."
- Building up customs administration "should therefore be a high priority" as hydrocarbon revenues fall and need to be replaced.

### Priority actions and monitoring
- Prioritize strengthening customs administration to limit the largest revenue losses from corruption.
- Reduce tax exemptions and simplify rate structures to limit discretionary opportunities for corruption.
- Shift toward taxes less susceptible to corruption (notably GST/VAT) while improving tax administration capacity.
- Invest in professionalization: hire and train staff, improve internal controls, pay adequate wages, and enforce differentiated sanctions.
- Modernize and automate tax and customs procedures; implement auditing of computerized systems.
- Increase transparency (media reporting, public hydrocarbon revenue disclosures, EITI participation).
- Monitor excise tax collection closely since "Excise tax revenues will rise as corruption falls, implying that tax authorities should closely monitor how excise taxes are collected."

*Source: IMF Working Paper (content unit: _wp07270).*

### 1. Some low or not hydrocarbon Middle East countries have large agricultural and

### 1. Some low or not hydrocarbon Middle East countries have large agricultural and service sectors, which are often informal and rely on low-income day laborers who are paid irregularly. As a result, the formal sector is small; this, combined with a low tax base, makes it difficult to rely on modern systems such as personal income tax

### Tax structure and revenue levels
- Countries with little or no hydrocarbons (Lebanon, Morocco, Jordan, Tunisia, and Egypt) have a share of nonhydrocarbon tax revenues of over 20 percent of GDP.
- Hydrocarbon-producing countries tend to have a large share of government expenditure to GDP (30 to 40 percent) but most have a low share of nonhydrocarbon revenues of about 10 percent of GDP.
- For countries with no (Morocco and Jordan) or limited hydrocarbons (Egypt, Tunisia, and Syria) the ratio of nonhydrocarbon taxes to nonhydrocarbon GDP is about 25 percent; for countries with large hydrocarbon reserves, the ratio tends to be less than 5 percent.
- Lebanon is an outlier with relatively high average income per person and relatively low tax rates.
- Region-wide observations:
  - The Middle East is not, by commonly accepted standards, highly taxed relative to other regions at similar income levels.
  - The rising number of free trade agreements (FTAs) within the region will eliminate an important source of tax revenues.
  - Hydrocarbon revenues are highly volatile and will eventually run out, requiring replacement by other revenues.
- To maintain fiscal sustainability, the region should diversify tax revenues away from hydrocarbons, taking into account future government expenditures driven by population growth.

### Structural and administrative constraints on taxation
- Large agricultural and service sectors are often informal and reliant on low-income day laborers paid irregularly, reducing the formal tax base.
- Low quality of tax administration in relation to income has led many Middle East countries to rely predominantly on a few easy-to-tax sources, such as foreign trade taxes.
- Political economy factors constrain direct taxation:
  - Raising revenues from direct taxation depends on the size and strength of the middle class.
  - In low-income countries the poor have little taxable income and the rich and large enterprises can lobby for low tax rates and exemptions.
  - Indirect taxation (including trade taxes) often becomes a main source of government revenue because it can be implemented with relatively less political cost.

### Empirical study: scope, data, and specification
- Novelty: first study to examine the effect of corruption on revenues from individual taxes rather than total tax revenues.
- Time period: 1990–2003.
- Countries analyzed (12): Algeria, Bahrain, Egypt, Jordan, Lebanon, Morocco, Oman, Sudan, Syria, Tunisia, United Arab Emirates, and Yemen.
- Dependent variables: nonhydrocarbon tax revenue relative to nonhydrocarbon GDP for individual taxes including:
  - (i) all taxes together
  - (ii) taxes on income, profit, and capital gains
  - (iii) taxes on individuals
  - (iv) corporate and other enterprise taxes
  - (v) taxes on payroll and workforce
  - (vi) taxes on property
  - (vii) taxes on goods and services
  - (viii) taxes on excise and taxes on specific services
  - (ix) international trade taxes
  - (x) customs and other import duties
  - (xi) taxes on exports
  - (xii) social contribution taxes
- Independent variables: Real income per capita (ln), share of agriculture in GDP, openness, inflation (CPI), corruption.
- Corruption proxy: International Country Risk Guide (ICRG) Corruption Index rescaled so index ranges from 0 to 10 and multiplied by minus one so higher values mean more corruption.
- Estimation method: system-GMM panel estimator to address endogeneity and omitted variable bias; country effects (ηij) and time effects (μtj) included.
- Rationale for nonhydrocarbon normalization: using non-hydrocarbon taxes to non-hydrocarbon GDP is deemed a better measure for the taxation level of the population.

### Key econometric findings
- Sargan tests for overidentifying restrictions produced large p-values across cases, suggesting instruments are acceptable.
- Income elasticity:
  - Most tax revenues are not very responsive to changes in nonhydrocarbon income.
  - Taxes on individuals are statistically significantly affected by income changes.
- Agriculture share:
  - Overall, a larger share of agriculture in GDP is associated with lower total tax revenue.
  - Exceptions: taxes directly related to the agricultural sector and higher income taxes in countries with higher agricultural shares.
- Openness and inflation:
  - Degree of openness and inflation do not have a systematic effect on most taxes.
  - Openness is generally insignificant for most taxes; trade-related taxes may behave differently.
  - The Tanzi effect (real tax erosion from inflation) is not generally apparent; inflation impacts are often positive on collected taxes in the sample.
- Corruption:
  - Corruption does not have a statistically significant impact on total tax revenues in the Middle East.
  - When analyzing individual taxes, corruption has a pronounced negative and statistically significant effect on taxes that require frequent interactions between tax authorities and private agents:
    - Taxes on exports are negatively and statistically significantly affected by corruption.
    - Customs and other import duties are negatively and statistically significantly affected by corruption.
    - International trade taxes are negatively and statistically significantly affected by corruption.
    - Taxes on excise and taxes on specific services are also affected by corruption (negative and statistically significant).
  - Direct taxes on corporations and individuals show little or only marginal significance with respect to corruption, potentially due to:
    - Introduction of Large Taxpayer Offices (LTOs) targeting easily monitored large taxpayers.
    - The overall low level of direct taxes leading to higher compliance.
  - Indirect taxes (property taxes, taxes on goods and services) generally do not show statistically significant effects from corruption, possibly because they affect formal activity with relatively transparent accounts.

### Explanations for corruption’s impact on trade- and excise-related taxes
- Trade and excise taxes are more vulnerable to corrupt practices because:
  1. Outdated legislation with rate differentiations and exemptions.
  2. Outdated tax administration requiring extensive physical inspection and frequent interactions between officials and traders.
  3. High traders’ costs of complying with border formalities (about 27 percent of the value of the shipment). Corrupting underpaid border guards with discretionary power can, for instance, avoid delays in clearance, which can add an estimated 10 percent in costs alone.
- Customs administration reforms have seen improvements in strategy, law, procedures, and information technology in many countries, but organizational structure and institutional processes conducive to integrity and effectiveness have hardly improved.
- Evidence from customs modernization features across selected Middle East countries shows variation in improvements in custom strategy, custom law, procedures, post-release verification, organization, and information technology usage (see summarized features and coding for improvements).

### Policy implications and recommendations
- Diversify the tax base away from hydrocarbons to maintain long-term fiscal sustainability, because:
  - The region is not highly taxed relative to peers at similar income levels.
  - FTAs within the region will reduce trade tax revenues.
  - Hydrocarbon revenues are volatile and finite; population growth implies future expansion of government spending requiring more revenues.
- Strengthen tax administration to increase nonhydrocarbon tax revenues in both hydrocarbon and nonhydrocarbon producing Middle East countries.
- Prioritize reforms in areas where corruption most reduces revenue:
  - Modernize customs and border procedures to reduce frequent discretionary interactions and physical inspection requirements.
  - Simplify and update legislation to remove rate differentiations and exemptions that create rent-seeking opportunities.
  - Implement institutional and organizational reforms that enhance integrity and reduce opportunities for corruption in customs and excise collection.
  - Expand and modernize Large Taxpayer Offices (LTOs) and targeted compliance in direct taxation to capture easily monitored tax bases.
- Recognize that as FTAs reduce trade-tax revenues, reforms to domestic tax systems and broader tax-base diversification are urgent.

*Source: IMF Working Paper (content unit: _wp07270 - 1. Some low or not hydrocarbon Middle East countries have large agricultural and service sectors, which are often informal and rely on low-income day laborers who are paid irregularly. As a result, the formal sector is small; this, combined with a low tax base, makes it difficult to rely on modern systems such as personal income tax).*

### 1.   Corruption at the customs level is most harmful to revenue and needs to be reduced.

### 1.   Corruption at the customs level is most harmful to revenue and needs to be reduced.

### Findings on the incidence and impact of corruption
- Corruption at the customs level "hurts not only tax revenues but also the capacity to trade."
- Trade taxes as a share of GDP are "not very large in the Middle East compared to other regions" but their yield "appears to be heavily affected by corruption."
- Corruption appears to have a stronger negative effect on trade and excise tax revenues than on some other taxes.
- The rising number of FTAs, by reducing tax revenues, "are themselves likely to diminish the effect of corruption."
- Empirical caveats:
  - Tax reforms in the Middle East between "1990 and 2003" may have caused structural breaks not fully captured by the regressions.
  - Panels are "not fully balanced," so for some taxes in certain countries for some years observations are sparse, making inference hazardous.
  - The lack of statistical significance of the corruption variable for some taxes does not necessarily imply no effect on revenue-generating capacity.

### Tax policy implications
- To diminish the propensity for corruption governments should:
  - "reduce exemptions,"
  - "reduce trade taxes to rate differentiations,"
  - "reform the structure of the revenue system."
- Indirect taxes (GST/VAT) are considered "less susceptible to corruption, since tax authorities have far less discretion, and they raise more revenues when marginal incomes rise."
- Regional adoption of GST/VAT:
  - Morocco and Tunisia in the "late 1980s,"
  - Egypt in "1991,"
  - Jordan in "2001,"
  - Yemen and Syria "will soon do so,"
  - GCC countries "are also considering adopting the VAT but no decision has yet been made."
- Recommendation to increase both direct and indirect taxes in countries "expecting oil revenue to decline soon," while noting political constraints:
  - Direct taxes: politically difficult to raise significantly because of pressure from interest groups.
  - Indirect taxes: "Constraints on indirect taxes are lower," but require a sophisticated tax administration.

### Administrative reforms and incentive measures
- Reinforce administrative capacity by "reforming the structure of the revenue system."
- Pay administrators more: "Paying administrators more will also reduce the attraction of corruption."
- Hire and train professional staff; strengthen internal control systems; change incentives within revenue administration.
- Combine decent pay with "an effective sanction system, which might differentiate between different types of corruption."
  - Footnote example: punishment for an employee who accepts a bribe to expedite processing of a refund may differ from punishment for an auditor who accepts a bribe to refrain from adjusting a tax liability; both should be fired, but criminal sanctions could be different.
- Modernize tax administration to reduce personal contacts and increase automated procedures:
  - "Mail and telephone communication should be the norm rather than personal contacts."
  - Use computerized systems whenever possible and "implement a system for auditing computerized systems to detect fraudulent changes to programs or files."
  - Example: "if tax compliance certificates are required by law, they should be issued automatically by the computer system."
- Simplify the tax system to reduce discretion and opportunities for corruption:
  - Few rates, few exemptions, readily determinable taxable bases, easy-to-calculate tax liabilities.
  - Broad use of withholding, presumptive income schedules, minimum taxes, and clear rules.
  - "Tax officials should have little discretion."

### Transparency measures and external initiatives
- Transparency reduces incentives to solicit bribes: "If the press can report corruption, officials will have less incentive to solicit bribes because the probability and costs of getting caught are likely to be higher."
- Make hydrocarbon-sector revenues reported by companies available to the public, for example by subscribing to the Extractive Industries Transparency Initiative (EITI).
  - EITI (launched in "2002") requires companies (including state-owned resource companies) to report aggregate payments to government and government to publish aggregate payments it has received, so discrepancies are transparent.
  - "EITI reporting guidelines and reporting templates for country governments and international and national companies have been drafted."

### Constraints, political economy, and implementation challenges
- Fighting institutional corruption "depends on one critical factor: the political commitment of the country's highest authorities to do so."
- None of the reforms to raise tax revenues or reduce corruption "can be easily implemented."
- The Middle East has experienced both successes and setbacks in past economic reforms; corruption "probably cannot be fully eliminated, it must be reduced."
- Building up customs administration "should therefore be a high priority" as hydrocarbon revenues fall and need to be replaced.

### Priority actions and policy recommendations
- Prioritize strengthening customs administration to limit the largest revenue losses from corruption.
- Reduce tax exemptions and simplify rate structures to limit discretionary opportunities for corruption.
- Shift toward taxes less susceptible to corruption (notably GST/VAT) while improving tax administration capacity.
- Invest in professionalization: hire and train staff, improve internal controls, pay adequate wages, and enforce differentiated sanctions.
- Modernize and automate tax and customs procedures; implement auditing of computerized systems.
- Increase transparency (media reporting, public hydrocarbon revenue disclosures, EITI participation).
- Monitor excise tax collection closely since "Excise tax revenues will rise as corruption falls, implying that tax authorities should closely monitor how excise taxes are collected."

*Source: _wp07270 - 1.   Corruption at the customs level is most harmful to revenue and needs to be reduced.*

### Appendix I: COMPARISON OF TAXES BY REGION

### Appendix I: COMPARISON OF TAXES BY REGION

### Table 1. Consolidated Central Government: Total Revenue by Region, 1990-2004 (In percent of GDP)
- OECD Countries: 30.95 31.53 31.84 31.94 32.47 31.82 32.44 32.46 32.39 33.79 34.15 34.35 34.19 34.92 34.06
- African Countries: 22.43 22.28 22.15 23.98 22.24 24.95 25.35 23.11 22.60 23.30 24.05 24.63 24.67 28.13 33.16
- Asian and Pacific Countries: 21.08 20.78 19.66 20.10 20.07 20.63 20.82 20.22 19.19 20.75 21.25 22.10 21.10 22.56 23.68
- European Countries 3/: 5.04 34.42 35.06 34.92 34.47 33.16 33.93 34.11 34.14 35.01 35.65 34.59 34.63 35.95 35.64
- Middle East and Central Asian Countries: 29.51 25.35 24.61 26.24 25.96 25.88 25.85 25.31 23.42 22.33 25.03 24.96 29.30 24.73 23.50
- Western Hemisphere Countries: 18.07 20.12 20.39 21.90 21.67 20.02 19.09 20.27 19.76 20.12 22.89 23.67 23.50 25.52 25.51
- Unweighted average 4/: 26.18 25.75 25.62 26.51 26.15 26.07 26.25 25.91 25.25 25.88 27.17 27.38 27.90 28.64 29.26

### Table 2. Consolidated Central Government: Total Tax Revenue by Region, 1990-2004 (In percent of GDP)
- OECD Countries: 20.11 19.99 19.82 19.63 20.26 19.75 20.25 20.35 20.03 20.66 20.84 20.96 20.66 20.81 20.54
- African Countries: 16.17 15.54 15.67 16.41 16.52 17.78 17.32 17.33 16.91 17.47 17.77 17.36 17.82 20.62 22.83
- Asian and Pacific Countries: 14.08 13.18 13.05 13.21 13.58 14.19 14.37 13.89 12.85 13.76 13.78 14.93 14.28 15.34 16.52
- European Countries 2/: 21.40 20.94 20.73 20.72 20.81 19.83 20.36 20.78 20.18 20.57 20.66 19.83 19.47 20.16 19.88
- Middle East and Central Asian Countries: 12.75 12.89 13.53 13.55 15.29 14.88 13.62 13.32 12.52 12.46 15.88 14.62 14.19 11.65 13.34
- Western Hemisphere Countries: 12.60 14.00 14.81 15.96 15.78 14.94 14.08 14.53 14.07 14.17 15.76 15.87 16.05 17.09 17.67
- Unweighted average 3/: 16.19 16.09 16.27 16.58 17.04 16.89 16.67 16.70 16.09 16.51 17.45 17.26 17.08 17.61 18.46

### Table 3. Consolidated Central Government: Taxes on Income, Profits, and Capital Gains by Region, 1990-2004 (In percent of GDP)
- OECD Countries: 9.26 9.31 8.97 8.84 8.95 8.81 9.09 9.21 9.10 9.19 9.69 10.04 9.74 9.91 10.10
- African Countries: 5.27 4.82 5.12 5.12 4.98 5.15 5.59 5.55 5.26 5.38 5.14 5.05 5.39 5.89 5.23
- Asian and Pacific Countries: 4.48 4.68 4.68 4.98 4.59 4.49 4.70 4.65 4.43 4.96 5.13 6.37 6.07 6.51 6.63
- European Countries 2/: 9.02 9.03 8.20 8.19 7.98 7.43 7.65 7.83 7.29 7.41 7.73 7.45 7.13 7.07 6.89
- Middle East and Central Asian Countries: 4.16 4.23 3.94 3.99 5.09 5.16 5.16 4.93 4.22 4.42 6.74 5.94 5.53 2.77 3.28
- Western Hemisphere Countries: 4.13 4.47 4.84 5.27 5.05 4.48 4.04 4.30 4.02 4.05 5.60 5.32 5.04 5.22 5.59
- Unweighted average 3/: 6.05 6.09 5.96 6.03 6.11 5.92 6.04 6.08 5.72 5.90 6.67 6.70 6.48 6.23 6.28

### Table 4. Consolidated Central Government: Taxes on Individuals by Region, 1990-2004 (In percent of GDP)
- OECD Countries: 6.75 6.89 6.80 6.40 6.45 6.34 6.37 6.29 6.49 6.29 6.35 6.85 6.76 6.86 6.78
- African Countries: 1.77 1.62 1.74 1.77 1.66 2.21 2.80 2.84 2.41 2.95 2.68 2.60 2.38 2.82 0.85
- Asian and Pacific Countries: 1.65 1.71 1.57 1.44 1.36 1.44 1.59 1.61 1.94 1.93 2.36 2.60 2.89 3.25
- European Countries 2/: 6.01 5.99 5.92 5.48 5.39 5.02 5.14 5.08 4.86 4.83 4.84 4.72 4.67 4.47 4.16
- Middle East and Central Asian Countries: 0.76 0.82 0.81 0.97 0.93 0.93 0.69 0.93 1.42 1.53 1.01 1.10 1.05 1.02 1.18
- Western Hemisphere Countries: 0.46 0.57 0.82 1.14 1.04 1.23 0.95 0.96 0.91 0.93 2.24 2.30 2.24 2.05 2.39
- Unweighted average 3/: 2.90 2.93 2.94 2.86 2.80 2.86 2.92 2.95 2.95 3.08 3.18 3.32 3.28 3.35 3.10

### Table 5. Consolidated Central Government: Taxes on Individuals by Region, 1990-2004 (In percent of GDP)
- OECD Countries: 2.26 2.05 1.79 2.01 2.10 2.19 2.39 2.56 2.36 2.56 2.81 2.89 2.83 2.92 3.16
- African Countries: 3.06 2.55 2.49 2.48 1.95 1.96 1.95 1.68 1.54 1.54 1.39 2.00 2.51 2.78 4.04
- Asian and Pacific Countries: 2.24 2.31 2.43 2.89 2.67 2.37 2.62 2.58 2.26 2.52 2.63 2.86 2.92 3.13 2.79
- European Countries 2/: 2.81 2.79 2.09 2.26 2.40 2.25 2.33 2.57 2.30 2.44 2.57 2.46 2.33 2.46 2.57
- Middle East and Central Asian Countries: 2.67 2.60 2.36 2.42 2.40 2.23 2.28 2.14 1.72 1.51 2.37 2.37 1.92 1.57 1.88
- Western Hemisphere Countries: 2.46 2.61 2.66 2.73 2.70 1.94 1.84 1.97 1.66 1.80 1.98 1.95 1.89 2.24 2.26
- Unweighted average 3/: 2.58 2.49 2.30 2.46 2.37 2.16 2.23 2.25 1.97 2.06 2.29 2.42 2.40 2.52 2.78

(Note: Table 4 and Table 5 in the source appear as separate tables with related headings; both series are preserved exactly as presented.)

### Table 6. Consolidated Central Government: Corporations and Other Enterprises Taxes by Region, 1990-2004 (In percent of GDP)
- OECD Countries: 0.26 0.23 0.21 0.18 0.15 0.17 0.16 0.19 0.26 0.30 0.21 0.23 0.25 0.28 0.17
- African Countries: 0.07 0.01 0.01 0.01 0.03 0.03 0.04 0.03 0.03 0.04 0.04 0.15 0.16 0.24 0.20
- Asian and Pacific Countries: 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.11 0.12 0.12 0.12 0.14 0.18
- European Countries 2/: 0.53 0.28 0.37 0.33 0.26 0.27 0.27 0.30 0.28 0.33 0.28 0.29 0.29 0.41 0.37
- Middle East and Central Asian Countries: 0.15 0.13 0.15 0.15 0.13 0.15 0.18 0.15 0.17 0.16 0.66 0.60 0.57 0.44 0.42
- Western Hemisphere Countries: 0.11 0.09 0.10 0.09 0.07 0.06 0.08 0.14 0.12 0.00 0.06 0.14 0.16 0.28 0.14
- Unweighted average 3/: 0.18 0.12 0.14 0.13 0.11 0.11 0.12 0.14 0.15 0.16 0.23 0.25 0.26 0.30 0.24

### Table 7. Consolidated Central Government: Taxes on Payroll and Workforce by Region, 1990-2004 (In percent of GDP)
- OECD Countries: 0.75 0.73 0.72 0.69 0.68 0.60 0.62 0.67 0.54 0.65 0.63 0.54 0.52 0.49 0.47
- African Countries: 0.09 0.03 0.03 0.10 0.09 0.13 0.20 0.24 0.21 0.20 0.25 0.22 0.29 0.36 0.09
- Asian and Pacific Countries: 0.28 0.30 0.28 0.26 0.35 0.34 0.33 0.35 0.29 0.41 0.47 0.34 0.35 0.46 0.48
- European Countries 2/: 0.79 0.73 0.64 0.61 0.58 0.53 0.53 0.55 0.45 0.52 0.52 0.44 0.45 0.38 0.37
- Middle East and Central Asian Countries: 0.29 0.34 0.35 0.38 0.31 0.28 0.20 0.33 0.30 0.30 0.42 0.42 0.46 0.45 0.52
- Western Hemisphere Countries: 0.32 0.30 0.28 0.25 0.30 0.21 0.19 0.17 0.18 0.41 0.72 0.82 0.97 1.06 1.19
- Unweighted average 3/: 0.42 0.41 0.38 0.38 0.39 0.35 0.34 0.38 0.33 0.42 0.50 0.46 0.51 0.53 0.52

### Table 8. Consolidated Central Government: Property Taxes by Region, 1990-2004 (In percent of GDP)
- OECD Countries: 9.19 9.17 9.34 9.33 9.85 9.58 9.85 9.82 9.61 10.05 9.94 9.74 9.84 9.79 9.59
- African Countries: 4.62 4.52 4.71 4.78 4.58 4.96 5.01 5.21 5.65 5.50 5.24 5.06 5.57 6.46 9.17
- Asian and Pacific Countries: 4.59 4.30 4.47 4.57 5.00 5.31 5.32 5.20 5.03 5.47 5.40 5.65 5.47 6.19 6.26
- European Countries 2/: 9.81 9.58 9.88 10.04 10.34 10.24 10.75 11.03 11.11 11.46 11.43 11.01 10.96 11.29 11.34
- Middle East and Central Asian Countries: 3.91 3.91 4.38 4.59 4.76 4.90 4.06 4.49 4.47 4.58 5.29 5.05 4.89 5.78 6.29
- Western Hemisphere Countries: 4.13 4.65 5.18 5.93 6.04 6.74 6.90 7.23 7.20 7.42 7.33 7.03 7.60 7.77 8.57
- Unweighted average 3/: 6.04 6.02 6.33 6.54 6.76 6.96 6.98 7.16 7.18 7.41 7.44 7.26 7.39 7.88 8.54

### Table 9. Consolidated Central Government: Taxes on Goods and Services by Region, 1990-2004 (In percent of GDP)
- OECD Countries: 2.86 3.00 3.15 3.14 3.36 3.29 3.38 3.25 3.16 3.29 3.11 3.00 3.11 3.17 3.03
- African Countries: 1.37 1.43 1.61 1.39 1.22 1.41 1.44 1.61 1.74 1.50 0.96 1.12 1.24 0.92 1.72
- Asian and Pacific Countries: 2.26 2.23 2.25 1.97 1.97 1.92 2.09 2.18 2.13 2.10 2.40 2.05 2.10 2.24 2.22
- European Countries 2/: 3.04 3.27 3.08 3.19 3.16 3.25 3.29 3.19 3.26 3.34 3.30 3.18 3.24 3.36 3.27
- Middle East and Central Asian Countries: 1.55 1.58 1.80 1.81 2.10 1.95 1.65 1.76 1.75 1.55 1.28 1.18 1.16 1.14 1.02
- Western Hemisphere Countries: 1.64 1.64 1.74 1.90 1.91 1.71 1.70 1.92 2.05 1.94 1.88 1.88 2.20 2.17 2.33
- Unweighted average 3/: 2.12 2.19 2.27 2.23 2.28 2.26 2.26 2.32 2.35 2.29 2.15 2.07 2.18 2.17 2.27

### Table 10. Consolidated Central Government: Taxes on Excises and Taxes on Specific Services by Region, 1990-2004 (In percent of GDP)
- OECD Countries 3/ 4/: 0.60 0.49 0.50 0.47 0.53 0.49 0.46 0.37 0.33 0.31 0.29 0.26 0.21 0.21 0.18
- African Countries: 5.89 5.94 5.60 6.23 5.66 7.37 6.15 5.90 5.59 6.07 6.75 6.67 6.29 7.41 7.71
- Asian and Pacific Countries: 4.40 3.49 3.25 3.01 3.11 3.61 3.57 3.18 2.69 2.51 2.33 2.16 2.05 1.89 2.82
- European Countries 4/: 1.10 1.02 1.31 1.44 1.35 1.09 0.88 0.80 0.75 0.63 0.58 0.54 0.52 0.80 0.75
- Middle East and Central Asian Countries: 3.70 3.70 4.07 3.73 4.30 3.78 3.39 2.91 2.97 2.59 2.33 2.16 2.16 1.60 1.80
- Western Hemisphere Countries: 3.56 4.03 3.87 3.80 3.69 3.22 2.76 2.77 2.53 2.48 2.06 2.11 2.11 2.63 1.99
- Unweighted average 5/: 3.21 3.11 3.10 3.12 3.27 3.26 2.87 2.65 2.48 2.43 2.39 2.32 2.22 2.42 2.54

Notes accompanying the table in the source:
- 2/ Includes profits of exports or import monopolies, exchange profits and taxes and other taxes on international trade and transactions.
- 3/ European Union countries do not report statistics on international trade taxes to Government Finance Statistics.
- 4/ Including OECD countries.
- 5/ For each revenue classification, only countries for which data are available are included in the calculation.

### Table 11. Consolidated Central Government: International Trade Taxes and Transactions by Region, 1990-2004 (In percent of GDP)
- OECD Countries: 0.59 0.48 0.49 0.47 0.52 0.51 0.48 0.38 0.34 0.30 0.28 0.22 0.18 0.17 0.13
- African Countries: 4.81 4.93 4.74 5.32 3.64 4.11 3.37 2.95 2.57 3.52 3.96 4.21 4.19 5.02 5.91
- Asian and Pacific Countries: 4.06 3.23 3.02 2.76 2.86 3.40 3.35 2.78 2.55 2.49 2.19 1.91 1.78 1.76 2.72
- European Countries 2/: 1.06 1.03 1.17 1.23 1.18 1.04 0.88 0.84 0.73 0.52 0.44 0.40 0.38 0.68 0.51
- Middle East and Central Asian Countries: 3.27 3.26 3.61 3.59 3.35 3.27 3.13 2.76 2.82 2.43 2.22 2.06 1.85 1.30 1.57
- Western Hemisphere Countries: 2.99 3.54 3.46 3.38 3.44 3.02 2.54 2.58 2.35 2.33 1.95 2.01 1.93 2.49 1.81
- Unweighted average 3/: 2.80 2.74 2.75 2.79 2.50 2.56 2.29 2.05 1.89 1.93 1.84 1.80 1.72 1.90 2.11

### Table 12. Consolidated Central Government: Taxes on Customs and Other Import Duties by Region, 1990-2004 (In percent of GDP)
- OECD Countries: 0.02 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
- African Countries: 0.68 0.59 0.45 0.15 0.49 0.54 0.36 0.27 0.34 0.24 0.28 0.29 0.29 0.43 0.41
- Asian and Pacific Countries: 0.30 0.20 0.18 0.20 0.24 0.21 0.22 0.40 0.11 0.11 0.24 0.10 0.03 0.05 0.03
- European Countries 2/: 0.02 0.02 0.04 0.15 0.03 0.05 0.02 0.00 0.00 0.02 0.07 0.08 0.07 0.11 0.20
- Middle East and Central Asian Countries: 0.04 0.05 0.04 0.05 0.04 0.27 0.13 0.06 0.04 0.02 0.01 0.01 0.01 0.13 0.02
- Western Hemisphere Countries: 0.14 0.10 0.08 0.04 0.03 0.03 0.02 0.01 0.01 0.00 0.00 0.00 0.09 0.13 0.15
- Unweighted average 3/: 0.20 0.16 0.13 0.10 0.14 0.18 0.12 0.12 0.08 0.07 0.10 0.08 0.08 0.14 0.14

### Table 13. Consolidated Central Government: Taxes on Exports by Region, 1990-2004 (In percent of GDP)
- OECD Countries: 7.50 7.77 8.09 8.33 8.45 8.47 8.72 8.82 9.14 9.74 9.91 10.12 10.38 10.99 10.18
- African Countries: 0.28 0.24 0.18 0.19 0.21 0.23 0.25 0.26 0.21 0.19 0.24 0.26 0.77 1.03 2.16
- Asian and Pacific Countries: 0.09 0.10 0.23 0.21 0.24 0.33 0.32 0.37 0.45 0.40 0.55 1.00 0.88 1.05 0.12
- European Countries 2/: 8.60 8.58 9.50 9.59 9.39 8.95 9.53 9.57 10.02 10.76 11.07 10.94 11.22 11.97 11.66
- Middle East and Central Asian Countries: 1.17 1.14 1.00 1.07 0.98 1.03 0.93 0.82 0.99 1.12 0.89 1.19 1.17 1.52 1.79
- Western Hemisphere Countries: 2.17 2.07 2.08 2.23 2.18 1.71 1.75 2.26 2.40 1.91 2.57 2.66 2.79 3.16 3.44
- Unweighted average 3/: 3.30 3.32 3.51 3.60 3.58 3.45 3.58 3.68 3.87 4.02 4.21 4.36 4.54 4.95 4.89

### Table 14. Consolidated Central Government: Taxes on Social Contributions by Region, 1990-2004 (In percent of GDP)
- OECD Countries: 7.50 7.78 8.09 8.33 8.45 8.47 8.72 8.82 9.14 9.74 9.91 10.12 10.38 10.99 10.18
- African Countries: 0.28 0.24 0.18 0.19 0.21 0.23 0.25 0.26 0.21 0.19 0.24 0.26 0.77 1.03 2.16
- Asian and Pacific Countries: 0.09 0.10 0.23 0.21 0.24 0.33 0.32 0.37 0.45 0.40 0.55 1.00 0.88 1.05 0.12
- European Countries 2/: 8.60 8.58 9.50 9.59 9.39 8.95 9.53 9.57 10.02 10.76 11.07 10.94 11.22 11.97 11.66
- Middle East and Central Asian Countries: 1.17 1.14 1.00 1.07 0.98 1.03 0.93 0.82 0.99 1.12 0.89 1.19 1.17 1.52 1.79
- Western Hemisphere Countries: 2.17 2.07 2.08 2.23 2.18 1.71 1.75 2.26 2.40 1.91 2.57 2.66 2.79 3.16 3.44
- Unweighted average 3/: 3.30 3.32 3.51 3.60 3.58 3.45 3.58 3.68 3.87 4.02 4.21 4.36 4.54 4.95 4.89

(Note: The source presents social contributions and exports tables with identical numeric series for OECD and other regions in the pages captured; both series are preserved exactly as presented.)

### Appendix II: Data Sources (as listed)
- Taxes: IMF Fiscal Affairs Department Tax Revenue Database, http://www-int.imf.org/depts/fad/info_guide/info_resources/databases/taxrevenue.htm
- Real income per capita: International Financial Statistics.
- Nonhydrocarbon GDP: IMF country desks.
- Share of agriculture in economy: World Development Indicators.
- Openness: Calculated ratio to GDP of the sum of exports and imports; World Development Indicators.
- Inflation: CPI data, International Financial Statistics.
- Corruption: International Country Risk Guide (ICRG) Corruption Index, http://www.icrgonline.com/

*From IMF’s Fiscal Affairs Department revenue database. Tables and series are reproduced exactly as presented in the source content.*

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