Publication: Tax Capacity and Tax Effort : Extended Cross-Country Analysis from 1994 to 2009
Date
2012-10
ISSN
Published
2012-10
Author(s)
Abstract
One of the important factors for
economic development is the existence of an effective tax
system. This paper deals with the concept and empirical
estimation of countries' taxable capacity and tax
effort. It employs a cross-country study from a sample of
110 developing and developed countries during 1994-2009.
Taxable capacity refers to the predicted tax-to-gross
domestic product ratio that can be estimated empirically,
taking into account a country's specific macroeconomic,
demographic, and institutional features, which all change
through time. Tax effort is defined as an index of the ratio
between the share of the actual tax collection in gross
domestic product and taxable capacity. The use of tax effort
and actual tax collection benchmarks allows the ranking of
countries into four different groups: low tax collection,
low tax effort; high tax collection, high tax effort; low
tax collection, high tax effort; and high tax collection,
low tax effort. The analysis provides broad guidance for tax
reforms in countries with various levels of taxable capacity
and revenue intake.
Citation
“Le, Tuan Minh; Moreno-Dodson, Blanca; Bayraktar, Nihal. 2012. Tax Capacity and Tax Effort : Extended Cross-Country Analysis from 1994 to 2009. Policy Research Working Paper; No. 6252. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/58e00a09-3386-5d6f-8fcd-0a56439c4ed7 License: CC BY 3.0 IGO.”
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