How much more can the tax administration collect? Measuring tax potential for Senegal

Youssoupha Diagne and Arona Ba

MPRA Paper from University Library of Munich, Germany

Abstract: This paper measures tax potential in Senegal. The tax revenue structure shows a strong reliance on indirect taxes collected from foreign trade which is progressively declining thanks to trade liberalization reforms. A stochastic frontier model is used to compute the distance to potential for the main taxes. Results show that the overall tax revenue could be improved by 10.2 percentage points corresponding to a tax potential of 25.3% of GDP for Senegal. Furthermore, the income tax collection is the most distant from its potential and therefore its share in percentage of GDP can still be increased by 7.2 percentage point. However, the best performing tax is non-oil tariffs which only need a 0.2 percentage point increase to reach its potential

Keywords: tax frontier; tax capacity; tax revenue; tax effort; stochastic tax frontier; inefficiency (search for similar items in EconPapers)
JEL-codes: C23 C51 H21 (search for similar items in EconPapers)
Date: 2019-04-08
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:114168

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