Tax revenue instability, with particular reference to sub‐Saharan Africa

Bleaney, Michael; Gemmell, Norman; Greenaway, David

doi:10.1080/00220389508422395

Cited by 39 publications

(37 citation statements)

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“…The most commonly employed measure for external shocks is the volatility of terms of trade (Rodrik 1998;Rodrik 2001 Raddatz (2007, 157), changes in commodity prices are the most important external source of GDP fluctuations in low-income countries. Further, there is evidence that GDP instability is a good proxy for exposure to shocks (Bleaney et al 1995;Ebeke and Ehrhart 2012;Lledó and Poplawski-Ribeiro 2013).…”

Section: Exogenous Shocks and Vulnerabilitymentioning

confidence: 99%

“…Above all, it is likely to affect spending: specifically, if unanticipated shortfalls in tax revenue cannot be compensated from other sources (such as aid or borrowing), expenditure may be reduced and this can have adverse impacts on the economy. A number of studies identify an effect of revenue instability on expenditure instability (Bleaney / Gemmell / Greenaway 1995;Fielding 1997;Ebeke / Ehrhart 2012). In a broader context, investment is essential for growth, but uncertainty about the performance of the economy or the availability of finance for investment discourages investment (Lensink / Morrissey 2006).…”

Section: Exogenous Shocks and Vulnerabilitymentioning

confidence: 99%

“…The few that have addressed tax instability in sub-Saharan Africa (SSA) focus on the consequences rather than determinants. Bleaney / Gemmell / Greenaway (1995) examined possible causes of revenue instability for SSA economies both in terms of the underlying structure of their tax systems and the wider structure of their economies. Trade tax dependence largely explains differences in tax revenue instability between developed countries (with low instability and trade tax dependence) and developing countries (high instability and trade tax dependence).…”

Section: Exogenous Shocks and Vulnerabilitymentioning

confidence: 99%

“…Governments will be aware of any political and economic costs associated with replacing lost revenues with alternative sources of funds, as compared to the costs associated with expenditure cuts. Bleaney et al (1995) investigated the links between total revenue and expenditure instability in more detail for a sample comprising Botswana, Ghana, Kenya, Malawi, Swaziland, and Zambia. The evidence pointed consistently to a close link between revenue and expenditure instability, suggesting that governments have very limited capacity to maintain expenditures when tax revenues fluctuate.…”

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confidence: 99%

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Assessing the tax systems' risk and efficiency in Russian regions at different levels of the budget system

Малкина¹,

Balakin²

2017

RETP

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− For the whole sample of lower-income countries, ER pressure has a significant negative effect on trade and income tax. In contrast, its effect is negative yet not significant on indirect taxes (goods and services tax), and practically zero on non-tax revenue. The effect is particularly strong and significant in non-democratic as well as in non-resource-rich countries. Apparently, these groups experience more difficulties in counteracting the impact of ER pressure shocks. − Terms-of-trade shocks have significant negative effects on non-tax revenue. The reason is perhaps that these shocks are likely to reduce profits of public enterprises that act as commodity exporters. The effect is negative and significant for all sub-groups except democracies, but stronger for non-resource-rich compared to resource-rich countries. Terms-of-trade shocks also affect income tax revenue in non-democratic and non-resource-rich countries. − Natural disaster intensity affects mostly trade and income taxes, although the coefficient is not significant in any specification.All in all it can be inferred that non-democratic and non-resource-rich countries are particularly vulnerable to shocks affecting income taxes and non-tax revenue. In the case of resource-rich countries, no clear patterns emerge: their revenue structure, though more volatile than that of non-resource-rich countries due to a higher dependence on non-tax revenue, could be less vulnerable to external shocks. At least, there is no robust evidence pointing to volatility of revenue from natural resources being directly connected to increased vulnerability vis-à-vis shocks analysed in this report. This finding Study on the vulnerability and resilience factors of tax revenues in developing countriesFinal Report AETS Consortium -November 2013 4is somewhat unexpected, as conventional wisdom and the literature on rent incomes from (principally) oil would suggest resource-rich economies to be particularly vulnerable to global price and capital shocks. From the present study we get the impression that it is much more the non-resource-rich countries we should be worried about.The findings indicate that vulnerability to shocks should not be regarded exclusively as an issue of major adverse events hitting an economy. It may be important for governments, donors and international organisations to prepare for such events and to develop the appropriate financial tools to deal with them. But it is also important to keep in mind that minor events also have significant effects on revenue and that long-term structural reforms (in particular regarding income tax and non-tax revenue) are a necessary ingredient of any strategy targeting vulnerability of revenue in developing countries. In this context, a broad tax portfolio could contribute to making total revenue less susceptible to individual shocks. Further, the better performance of democracies suggests that reforms pointing to accountability, transparency and rule of law could have an important positive effect on revenue resilience, as g...

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Section: Exogenous Shocks and Vulnerabilitymentioning

confidence: 99%

Section: Exogenous Shocks and Vulnerabilitymentioning

confidence: 99%

Section: Exogenous Shocks and Vulnerabilitymentioning

confidence: 99%

mentioning

confidence: 99%

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Assessing the tax systems' risk and efficiency in Russian regions at different levels of the budget system

Малкина¹,

Balakin²

2017

RETP

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“…Besides, curtailing government capital spending to service debt could reduce improvement in long-term fiscal balance or even a worsening (see, e.g. Bleaney, Gemmell, & Greenaway, 1995;Bruce & Turnovsky, 1999 among others).…”

Section: Introductionmentioning

confidence: 99%

Fiscal sustainability in the presence of structural breaks: Does overconfidence on resource exports hurt government’s ability to finance debt? Evidence from Nigeria

Aliyu

2016

Cogent Economics & Finance

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Abstract:The sustainability of the Nigerian fiscal deficit along with the role of the dynamics of government revenues and spending in adjusting the size of the deficit is examined using annual data from 1961 to 2014. After allowing for structural breaks, the study finds evidence of a cointegration relation between the government revenues and spending. The results did not indicate the presence of asymmetries in either the threshold autoregression or momentum threshold autoregression specifications of the country's budgetary adjustment process. Interestingly, the size of the long run slope parameter appears to be significantly less than one, thus offering support for the soft budget strategy, which also suggests that the government might face difficulties in financing its debts in the long run. Lastly, the short run and long run Granger causality results, while providing evidence in support of the fiscal synchronization hypothesis, also raise some important issues, particularly on the strength of budget deficit sustainability in the country.

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Do International Remittances Affect the Level and the Volatility of Government Tax Revenues?

Ebeke

2013

J. Int. Dev.

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This paper examines whether international remittance inflows expand fiscal space in receiving through their positive effects on the level and the stability of government tax revenues. It investigates whether these effects of remittances are conditional on the presence of a value added tax (VAT). Using a large sample of countries, and even after factoring in the endogeneity of remittances and the VAT adoption, this study highlights that remittance inflows increase the level and the stability of government tax revenue ratio in presence of a VAT. Copyright © 2013 John Wiley & Sons, Ltd.

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Tax revenue instability, with particular reference to sub‐Saharan Africa

Cited by 39 publications

References 10 publications

Assessing the tax systems' risk and efficiency in Russian regions at different levels of the budget system

Assessing the tax systems' risk and efficiency in Russian regions at different levels of the budget system

Fiscal sustainability in the presence of structural breaks: Does overconfidence on resource exports hurt government’s ability to finance debt? Evidence from Nigeria

Do International Remittances Affect the Level and the Volatility of Government Tax Revenues?

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