Understanding Countries’ Tax Effort
IMF Working Papers, December 16, 2013
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Bibliographic details
- Authors: Marco Committeri, Carola Pessino
- Published: December 16, 2013
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484301272.001
Summary
- Paper presents a model to determine the tax effort and tax capacity of 113 countries and the main variables on which they depend.
- Results and the model allow a clear determination of which countries are near their tax capacity and which are some way from it, and therefore, could increase their tax revenue.
- Paper determines central factors on which tax capacity depends: the level of development, trade, education, inflation, income distribution, corruption, and the ease of tax collection.
- Authors: Marco Committeri, Carola Pessino
- Date: December 16, 2013
- Publication series: Working Paper No. 2013/244
- Pages: 30
- Volume: 2013
- Issue: 244
- DOI: https://doi.org/10.5089/9781484301272.001
- Stock No: WPIEA2013244
- ISBN: 9781484301272
- ISSN: 1018-5941
Main findings and model features
- Coverage:
- Model applied to 113 countries.
- Purpose:
- Determine tax effort and tax capacity.
- Identify which countries are near tax capacity and which could increase tax revenue.
- Core determinants of tax capacity identified:
- Level of development
- Trade
- Education
- Inflation
- Income distribution
- Corruption
- Ease of tax collection
- Methodology (as described):
- Uses a frontier model / stochastic tax frontier to estimate tax capacity and inefficiency (tax effort shortfalls).
- Produces an estimated tax frontier and measures of tax effort relative to that frontier.
Policy-relevant implications
- Countries identified as significantly below their tax capacity could potentially increase tax revenue by addressing inefficiencies and institutional barriers.
- Central policy levers suggested by the analysis (derived from identified determinants):
- Strengthen tax administration to improve the ease of tax collection.
- Address corruption to increase actual tax capacity.
- Invest in education and broader development to raise long-term tax capacity.
- Manage inflation and trade policies in ways that support stable tax bases.
- Consider income distribution effects when assessing potential tax revenue gains.
Subjects and keywords
- Subject: Consumer price indexes, Corruption, Crime, Environment, Income distribution, National accounts, Natural resources, Prices, Revenue administration
- Keywords: Asia and Pacific, Consumer price indexes, Corruption, country's tax effort, descriptive statistics, estimated tax, frontier model, frontier tax function, Income distribution, inefficiency, institutional characteristic, natural resource, Natural resources, stochastic tax frontier, tax capacity, tax effort, tax frontier, tax frontier development, tax revenue, WP
Understanding Countries’ Tax Effort — IMF Working Paper No. 2013/244, Marco Committeri and Carola Pessino, December 16, 2013.