Expanding Taxable Capacity and Reaching Revenue Potential: Cross-Country Analysis
40 Pages Posted: 20 Apr 2016
Date Written: March 1, 2008
Abstract
An effective tax system is fundamental for successful country development. The first step to understand public revenue systems is to establish some commonly agreed performance measurements and benchmarks. This paper employs a cross-country study to estimate tax capacity from a sample of 104 countries during 1994-2003. The estimation results are then used as benchmarks to compare taxable capacity and tax effort in different countries. Taxable capacity refers to the predicted tax-gross domestic product ratio that can be estimated with the regression, taking into account a country's specific economic, demographic, and institutional features. Tax effort is defined as an index of the ratio between the share of the actual tax collection in gross domestic product and the predicted taxable capacity. The authors classify countries into four distinct groups by their level of actual tax collection and attained tax effort. This classification is based on the benchmark of the global average of tax collection and a tax effort index of 1 (when tax collection is exactly the same as the estimated taxable capacity). The analysis provides guidance for countries with various levels of tax collection and tax effort.
Keywords: Taxation &Subsidies, Debt Markets, Public Sector Economics &Finance, Emerging Markets, Economic Theory &Research
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Redistribution Via Taxation: The Limited Role of the Personal Income Tax in Developing Countries
By Eric M. Zolt and Richard M. Bird
-
Societal Institutions and Tax Effort in Developing Countries
By Richard M. Bird, Jorge Martinez-vazquez, ...
-
Inequality and Taxation: Evidence from the Americas on how Inequality may Influence Tax Institutions
By Kenneth L. Sokoloff and Eric M. Zolt
-
Globalization and Developing Countries - a Shrinking Tax Base?
By Joshua Aizenman and Yothin Jinjarek
-
Optimal Taxation in Infinitely-Lived Agent and Overlapping Generations Models: A Review
By Andres Erosa and Martin Gervais
-
Globalization and Developing Countries - A Shrinking Tax Base?
By Joshua Aizenman and Yothin Jinjarak
-
Technology and Taxation in Developing Countries: From Hand to Mouse
By Richard M. Bird and Eric M. Zolt
-
One Kind of Freedom: Reconsidered (and Turbo Charged)
By Roger L. Ransom and Richard C. Sutch