Tax revenue mobilization episodes in developing countries

Abstract

How do countries mobilize large additions to tax revenuedefined as an average increase in the tax-to-GDP ratio of 0.5 percent per year over three years or more? To answer this question, we build a novel dataset covering 55 episodes of large tax revenue increases in low-income countries and emerging markets. We find that: (i) reforms of indirect taxes and exemptions are the most common tax policy measures; (ii) multi-pronged tax administration reforms often go hand in hand with tax policy measures; and (iii) sustainability of the episodes hinges on tax administration reforms in the key compliance areas (risk-based audits, registration, filing, payment, and reporting).

The Impacts of Trade Protectionism on the Indian Economy

“…With a higher level of tariffs, protectionism would increase government revenue to a certain extent. Bakitoby and others in 2019 showed that low-income countries receive on average about 16 percent of their government revenue from customs duties [25]. Figure 4 illustrates that the customs revenue accounts for more than 15 % of the total tax revenue of India before 2016, indicating its critical role in the government revenue of India.…”

Can COVID-19 induce governments to implement tax reforms in developing countries?

“…Prob(𝑆𝑇𝑅 it = 1|𝑍 𝑖𝑡 ) = 𝛷(𝑍′ 𝑖𝑡 𝜗) Prob(𝑆𝑇𝑅 it = 1|𝑆 𝑖𝑡 , 𝑋it) = 𝛷(𝛼 𝑖 + 𝑃𝑜𝑙 𝑖𝑡 ′𝜼 + 𝑋 𝑖𝑡 ′𝜸) (1) with i = 1, …, N; t = 1, …, T, where 𝛷(⋅) = The parameters can be estimated by maximum likelihood. 23 However, as pointed out by King and Zeng (1999a, 1999b, 2001, the estimates of 𝛷(⋅) and 𝛷(⋅) ⋅ [1 − 𝛷(⋅)] among observations that include rare events (in our case, for which STR = 1) will be typically larger than those among observations that do not include rare events (i.e., for which STR = 0).…”

“…As low-income countries have limited fiscal space to accommodate the shock, we examine whether pandemic has created conditions for them to implement much-needed tax reforms to raise revenues over the longer term. 1 For this purpose, we rely on tax reform data from 45 emerging and low-income countries during 2000-2015.…”

“…Pandemics induce relative labor scarcity in some areas and/or a shift to greater precautionary savings. 1 Note however that to support aggregate demand following crises, typically countries in the short-run cut taxes despite being mindful of the need for long term reforms. At the same time, countries also take measures to offset some of the adverse effects of pandemics on revenues and budget deficits.…”

Pre-colonial centralization and tax compliance norms in contemporary Uganda

“…In addition to cross-country analyses, the literature also draws on case studies to assess progress towards meeting domestic revenue goals, evaluating reforms and drawing lessons for policy (see e.g., Akitoby et al 2020). Akitoby et al (2020) evaluate tax reforms in seven low-income countries, stressing the importance of political commitment and securing the buy-in of key stakeholders for sustained DRM efforts.…”