Political Institutions, State Building, and Tax Capacity: Crossing the Tipping Point
December 2, 2016
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Summary
An empirical finding by Gaspar, Jaramillo and Wingender (2016) shows that once countries cross a tax-to-GDP threshold of around 12¾ percent, real GDP per capita increases sharply and in a sustained manner over the following decade. In this paper, we attempt via four case studies—Spain, China, Colombia, and Nigeria—to illustrate that the improvements in tax capacity have been part of a deeper process of state capacity building. We discuss the political conditions that supported tax capacity building, highlighting three important political ingredients: constitutive institutions, inclusive politics and credible leadership.
Subject: Fiscal policy, Revenue administration, Subnational tax, Tax administration core functions, Tax return filing compliance, Taxes
Keywords: development, Global, government activity, income per capita, income tax, institutions, Lagos State government, political economy, progressive tax, real GDP, State revenue staff, Subnational tax, Tax administration core functions, tax capacity, tax reform, Tax return filing compliance, tax threshold, taxation, UDC government, WP
Pages:
33
Volume:
2016
DOI:
Issue:
233
Series:
Working Paper No. 2016/233
Stock No:
WPIEA2016233
ISBN:
9781475558142
ISSN:
1018-5941
