Economic Integration, Tax Erosion, and Decentralisation: An Empirical Analysis

Gastaldi, Francesca Giovanna Maria; Liberati, Paolo; Sciala, Antonio

doi:10.2139/ssrn.1754430

Cited by 1 publication

(1 citation statement)

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“…Among their major findings, economic integration increases the efficiency cost of capital taxation, but also increases the redistributive benefits of the tax from the perspective of the median voter mulling on a redistributive income tax rate. Gastaldi et al (2013) used a sample of OECD countries to addresses the issues of whether and how the degree of economic integration affects central government tax revenues and the decentralization of the public sector. Its main finding was that an increase in economic integration generates a downward pressure on implicit tax rates on mobile capital, which is growing at increasing rates amid economic integration, and that the process of tax erosion appears to contribute positively to increased public sector decentralization.…”

Section: Literature Reviewmentioning

confidence: 99%

Regional Economic Integration and Tax Revenue: East African Community

Nnyanzi

Babyenda

Bbale

2016

Journal of Economic Integration

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The ultimate goal of regional integration is the long-term high economic growth for member states. Tax revenues are critical to achieving this objective, given the high dependence of developing countries on this fiscal revenue. However, empirical studies have been unable to determine whether regional integration improves or impedes the mobilization of taxes. We use data from 1980 to 2014 in order to estimate a tax model; the results based on the generalized method of moments technique reveal that East African regional integration has had a significant impact on tax revenue owing to the presence of good institutions. We advocate any policy agenda aimed at improving institutional environment, financial sector, macroeconomic stability, and manufacturing and trade, as well as a well-integrated approach to reduce a shadow economy. Finally, given the deleterious nature of capital account liberalization, we believe that cautiously designed capital control policies are likely to enhance tax collections in East Africa.

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Section: Literature Reviewmentioning

confidence: 99%