Assessing the relationship between democracy and domestic taxes in developing countries

Helene Ehrhart

Economics Bulletin, 2012, vol. 32, issue 1, 551-566

Abstract: To what extent differences across developing countries in their domestic tax mobilisation can be explained by their political regime? Using a panel of 66 developing countries over 1990-2005, we found that democracy matters for achieving higher domestic taxes mobilisation. The constraints on the executive are especially of importance to counter the government's propensity to cave in for special interests and be insufficiently welfare minded. Moreover, democracy is specifically needed in natural resource rich countries to make natural resource rents contribute to higher domestic taxes and no longer be an impediment to a sustained tax system.

Keywords: Tax revenue; Democracy; Natural resources; Developing countries; Panel (search for similar items in EconPapers)
JEL-codes: H2 O1 (search for similar items in EconPapers)
Date: 2012-02-08
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Citations: View citations in EconPapers (9)

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Related works:
Working Paper: Assessing the relationship between democracy and domestic taxes in developing countries (2011)
Working Paper: Assessing the relationship between democracy and domestic taxes in developing countries (2011)
Working Paper: Assessing the relationship between democracy and domestic taxes in developing countries (2009)
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