Determinants of Tax Revenue Efforts in Developing Countries
IMF Working Papers, July 1, 2007
Source details
- Canonical URL
- Determinants of Tax Revenue Efforts in Developing Countries
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Bibliographic details
- Authors: Abhijit Sen Gupta
- Published: July 1, 2007
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451867480.001
Overview
- This paper contributes to the existing empirical literature on the principal determinants of tax revenue performance across developing countries by using a broad dataset and accounting for some econometric issues that were previously ignored.
- The paper makes use of a revenue performance index to assess countries’ performance relative to potential.
Key empirical findings
- Structural factors that significantly affect revenue performance:
- per capita GDP
- agriculture share in GDP
- trade openness
- foreign aid
- Other factors influencing revenue performance:
- corruption
- political stability
- share of direct and indirect taxes
- Using the revenue performance index:
- several Sub Saharan African countries are performing well above their potential
- some Latin American economies fall short of their revenue potential
Methodology and measures
- Employs a broad dataset covering developing countries.
- Accounts for econometric issues previously ignored in the literature.
- Develops and uses a revenue performance (effort) index to compare actual revenues with potential revenues.
Policy implications and recommendations (inferred from findings)
- Strengthening structural and institutional factors can improve revenue performance, including:
- policies that raise per capita GDP
- measures to manage the agriculture share in GDP and to harness trade openness
- consideration of the impact of foreign aid on domestic revenue mobilization
- anti-corruption and political-stability enhancing measures
- adjustments to the balance between direct and indirect taxes to improve revenue outcomes
Content in this bundle
- 12. Revenue Performance Index