Sovereign Rents and Quality of Tax Policy and Administration

Windfall revenues from foreign aid or natural resource exports can weaken governments' incentives to design or maintain efficient tax systems. Cross-country data for developing countries provide evidence for this hypothesis, using a World Bank indicator on "efficiency of revenue mobilization." Aid's negative effects on quality of tax systems are robust to correcting for potential reverse causality, to changes in the sample, and to alternative estimation methods. Revenues from natural resources are also associated with lower-quality tax systems, but results are somewhat sensitive to the choice of resource dependence indicators, and to a few extreme values in the data. Disaggregating by resource type, revenues from fuel exports are found to be more strongly associated than revenues from metals and ores exports with inefficient tax systems.

Bibliographic Details

Main Author:	Knack, Stephen
Format:	Journal Article biblioteca
Language:	EN
Published:	2009
Subjects:	Fiscal Policy E620, Foreign Aid F350, Taxation, Subsidies, and Revenue: General H200, International Linkages to Development, Role of International Organizations O190, Fiscal and Monetary Policy in Development O230, Resource Booms Q330,
Online Access:	http://hdl.handle.net/10986/4638
Tags:	Add Tag No Tags, Be the first to tag this record!