Fiscal Adjustment in Developing Countries Through Tax Administration Reform

Charles L. Vehorn ()
Additional contact information
Charles L. Vehorn: Radford University, USA

Journal of Developing Areas, 2011, vol. 45, issue 1, 323-338

Abstract: Many developing countries undertaking a fiscal adjustment have followed the International Monetary Fund's (IMF) recommendation to create a large taxpayer unit (LTU) to ensure stable or enhanced revenue flows, but the problem is that researchers have not conducted a systematic evaluation (other than a survey) of this recommendation's revenue raising effects. It is important to understand the effects of this reform measure because limited country resources should be allocated carefully to policy reforms that have a reasonable chance of success. In order to address the issue, this paper evaluates the effectiveness of this fiscal reform using economic data. A unique panel data set has been assembled to evaluate performance of LTUs based on each country's tax share (tax revenue divided by GDP) over a seven-year period. Employing a straightforward empirical methodology of comparing changes in the average annual tax share before and after implementation, a surprising 43 percent of countries experienced a decline in the tax share after implementing an LTU. The implication for policy makers is that successful reform not only includes adopting the correct policy, but also taking adequate steps to ensure that the policy is well-implemented.

Keywords: economic development; fiscal adjustment; tax administration reform; large taxpayers' unit (search for similar items in EconPapers)
JEL-codes: H39 O23 O57 (search for similar items in EconPapers)
Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://muse.jhu.edu/journals/journal_of_developing_areas/v045/45.vehorn.html

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:jda:journl:vol.45:year:2011:issue1:pp:323-338

Access Statistics for this article

More articles in Journal of Developing Areas from Tennessee State University, College of Business Contact information at EDIRC.
Bibliographic data for series maintained by Abu N.M. Wahid ().