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The Determinants of Tax Revenue and Tax Effort in Developed and Developing Countries: Theory and New Evidence 1995-2015

Marcelo Piancastelli and Anthony Thirlwall

Studies in Economics from School of Economics, University of Kent

Abstract: This paper measures the tax effort of a sample of fifty-nine developed and developing countries over the period 1995-2015 by comparing a country’s actual tax/GDP ratio with the ratio predicted derived from an international tax function which relates tax revenue to various measures of a country’s taxable capacity such as the level of per capita income; the share of trade in GDP; the productive structure, and the level of financial deepening. The tax function is estimated using cross section data; pooled time series/cross section data, and panel data using a fixed effects estimator. The results are compared and show a range of tax effort from South Africa with the highest effort and Switzerland with the lowest effort. Implications for policy are drawn.

Keywords: Tax ratios; tax effort (search for similar items in EconPapers)
JEL-codes: H2 (search for similar items in EconPapers)
Date: 2019-04
New Economics Papers: this item is included in nep-pbe, nep-pke and nep-pub
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