Is Aid Unfriendly to Tax? African Evidence of Heterogeneous Direct and Indirect Effects

Hermann Yohou (), Michael Goujon, Bertrand Laporte and Samuel Guérineau ()
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Samuel Guérineau: CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique

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Abstract: We explore the heterogeneous effects together with the transmission channels of aid on tax revenues in 47 African countries over 1990-2011 using a panel smooth threshold regression model and two alternative tax datasets from IMF and ICTD. We find that aid enhances tax revenues with decreasing returns for a threshold of 6.3% and 23% of GNI for total taxes and non-resource taxes respectively. Aid effect varies across countries and over time, but, on average, is positive. Moreover, we evidence that aid conditions the impact of the level of development, trade, institutions and resource wealth on tax.

Keywords: Foreign aid; Taxation; Nonlinearities; Revenues; Tax data; Africa (search for similar items in EconPapers)
Date: 2016-05-26
New Economics Papers: this item is included in nep-dev
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01321620
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Working Paper: Is Aid Unfriendly to Tax? African Evidence of Heterogeneous Direct and Indirect Effects (2016)
Working Paper: Is Aid Unfriendly to Tax? African Evidence of Heterogeneous Direct and Indirect Effects (2016)
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