Tax efficiency in selected Indian states

Is There a Connection Between the Tax Administration and the Political Power?

“…This institutional framework seems especially suitable for the analysis of the hypothesis of "electoral competition", since given the null fiscal responsibility in setting statutory tax parameters by regional governments, we expect a greater importance of this hypothesis than in the US case -which has been the case analysed in the papers previously citedwhere state governments can also react by modifying statutory tax parameters. Moreover, the importance of the unconditional grants in regional budgets enables us to test the extent to which their relative importance influences efficiency in tax administration (in our case, exclusively through an "income effect"), as Jha et al (1999) and Baretti et al (2002) have shown for India and Germany, respectively.…”

“…The most common approach considers it to be a public agency which attempts to maximise the amount of gross tax revenue collected 1 . However, some empirical papers have shown that the efforts made by a tax administration are also guided by electoral concerns (Hunter and Nelson, 1995;or, more recently, Young et al, 2001) and, in the case of the sub-central tax administrations, conditioned by the system of unconditional grants (Jha et al, 1999;Baretti et al, 2002). This paper aims to test several hypotheses concerning the political determinants of the activities of the regional tax administration in Spain, in contrast to…”

“…This methodology has already been used in another paper to study the behaviour of the tax administration (Jha et al, 1999).…”

Residual and technical tax efficiency scores for Brazilian municipalities: a two-stage approach

“…Hence, tax efficiency measurements are relevant for implementing a sound tax system. Traditionally, tax effort is computed as a ratio between the observed tax collection and its potential, where the latter comes from regression analysis or stochastic frontiers (Blanco, 1998;Baretti et al, 2000;Jha et al, 1999;Bahl, 1971). As an alternative to this approach, a few studies used nonparametric techniques such as DEA (Data Envelopment Analysis) 1 to measure the productive efficiency of tax collection (Moesen and Persoon, 2002;Thirtle et al, 2000;Førsund et al, 2005;Barros, 2007).…”

“…More recently, the conventional literature on tax effort was extended into several directions. Particular attention was given to the estimation of a production function based on stochastic tax frontiers (Battese and Coelli, 1992) to assess potential tax revenues; by comparing their results with the observed tax revenues, they computed tax effort indexes and hence, country tax performances (Jha et al, 1999;Esteller-Moré, 2005). More recently, the tax effort models were extended to include demand characteristics such as corruption and accountability as determinants of tax effort and tax performance (Bird and Tarasov, 2008).…”