Tax Structure and Corruption: Cross-Country Evidence

Yongzheng Liu and Haibo Feng
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Haibo Feng: Jinan University

International Center for Public Policy Working Paper Series, at AYSPS, GSU from International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University

Abstract: The determinants of corruption have long been an important subject for research in the elds of economics and political science. The literature has identi ed a wide range of factors that cause corruption; however, little research has been done on how the design of government policy in uences corruption. We advance a new factor, the tax structure being measured as both tax mix and tax complexity, as another potential cause of corruption, and present strong supporting evidence by using a large sample of countries over the period 1995-2009. Our ndings indicate that: (1) countries relying more heavily on direct taxes tend to enjoy a lower level of corruption, as opposed to countries with higher reliance on indirect taxes; and (2) countries with more complex tax systems tend to have a higher level of corruption, as opposed to countries with less complex tax systems. These results are robust across alternative measures of corruption and tax structure, and alternative estimations with and without correcting the potential endogeneity issue of the tax structure variables.

Keywords: Tax Structure; Direct versus Indirect Taxes; Tax Complexity; Corruption (search for similar items in EconPapers)
Pages: 28 pages
Date: 2014-06-28
New Economics Papers: this item is included in nep-pbe and nep-pub
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Citations: View citations in EconPapers (2)

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Journal Article: Tax structure and corruption: cross-country evidence (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ays:ispwps:paper1427

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