Building a tax state in the 21st century: Fiscal pressure, political regimes, and consumption taxation

Julian Limberg

World Development, 2022, vol. 154, issue C

Abstract: How can states expand their fiscal capacity in the 21st century? I examine this question by looking at one of the most powerful contemporary fiscal tools at hand – the Value-Added Tax (VAT). Using a novel dataset on VAT rates worldwide since 2000, I argue that fiscal problem pressure can lead to an expanded usage of the VAT. However, this effect depends on the type of political regime. Whereas democracies tend to raise VAT in dire fiscal times, VAT rates in autocracies are more immune to fiscal pressure. Furthermore, I demonstrate that a worse cost-benefit ratio of VAT increases in autocracies can account for this variation. These findings call for a closer investigation of political regime dynamics and fiscal policy-making worldwide.

Keywords: Tax policy; Political regimes; Fiscal capacity (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0305750X22000699
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:154:y:2022:i:c:s0305750x22000699

DOI: 10.1016/j.worlddev.2022.105879

Access Statistics for this article

World Development is currently edited by O. T. Coomes

More articles in World Development from Elsevier
Bibliographic data for series maintained by Catherine Liu ().