This study uses the ICTD UNU-WIDER Government Revenue Dataset in order to challenge and extend existing findings on the relationship between tax structures and economic growth, in a panel of 100 countries. The results suggest that, broadly, revenue-neutral increases in income taxes are associated with lower long-run GDP growth and that revenue-neutral reductions in trade taxes have not always had positive effects. Crucially, many of the results presented differ according to income level, calling into question the validity of existing findings for developing countries and suggesting that policy advice on this issue in developing countries should be viewed through a more cautious lens. 1 The UN has ratified two official indicators for Goal 17.1 (Strengthen Domestic Resource Mobilization […] to improve domestic capacity for tax and other revenue collection): (i) total government revenue (% of GDP) and (ii) the proportion of domestic budget funded by domestic taxes. direction and significance of the coefficients on the tax variables can differ dramatically between income groups. Furthermore, some of the results do not stand up to robustness checks. These findings suggest that (i) there is no 'one size fits all' relationship between tax structure and growth and subsequently that (ii) caution should be applied when interpreting any policy advice given to low-income countries that is informed by findings from studies based only on high-income countries. Furthermore, the inherent shortcomings of the models estimated are acknowledged, and their implications discussed.The rest of this paper is organized as follows: Section 2 briefly reviews of the economic theory and empirical evidence linking taxation and growth. Section 3 introduces the data used and examines the trends in tax structures for the sample. The following section, Section 4, outlines the empirical approach, and the results of the PMG estimations are presented in Section 5. Section 6 considers some extensions and robustness checks. Section 7 discusses the limitations of the study, and Section 8 concludes. TAX AND GROWTH: IN THEORY 5There are clear arguments both for and against a higher tax ratio leading to higher GDP growth. On the one hand, higher taxes distort the incentives for individuals to supply more labour or for firms to produce more. On the other, higher taxes provide governments with the potential to invest in, for example, infrastructural improvements, education or R&D, all of which can increase the economy's productive capacity.Changes in the tax rate in the neoclassical growth model (e.g. Solow, 1956;Swan, 1956) can cause a shift only in the steady-state growth path, not its slope; the model does not allow for assessing the impact of fiscal policy on the long-run (steady-state) growth rate. However, the models of Barro (1990), King and Rebelo (1990) and Mendoza, Milesi-Ferretti and Asea (1997) are somewhat more appropriate; King and Rebelo (1990, 130) investigate the effect of an increase in the 'output tax rate applied equally to all sectora...

The Government Revenue Dataset (GRD) was launched in September 2014 and, in the few years since, has gone on to be recognized as the go-to source for researchers and policymakers seeking cross-country data on government revenues and taxes. However, as with any such project, successive rounds of updates have led to new challenges. This paper describes in depth some of the changes compared to older versions of the GRD, which are the result of learning during the update process, user feedback and changes to the underlying source data. It is not the intention to repeat the original motivations behind the dataset; these are covered in depth in Prichard et al. (2014). Particular attention is paid to the nuances of (i) how social security contributions are recorded in the OECD Revenue Statistics and IMF's Government Finance Statistics (GFS) (ii) the treatment of VAT or excises collected on imports and the classification of some property taxes.

Most maternal and child deaths result from inadequate access to the critical determinants of health: clean water, sanitation, education and healthcare, which are also among the Sustainable Development Goals. Reasons for poor access include insufficient government revenue for essential public services. In this paper, we predict the reductions in mortality rates — both child and maternal — that could result from increases in government revenue, using panel data from 191 countries and a two-way fixed-effect linear regression model. The relationship between government revenue per capita and mortality rates is highly non-linear, and the best form of non-linearity we have found is a version of an inverse function. This implies that countries with small per-capita government revenues have a better scope for reducing mortality rates. However, as per-capita revenue rises, the possible gains decline rapidly in a non-linear way. We present the results which show the potential decrease in mortality and lives saved for each of the 191 countries if government revenue increases. For example, a 10% increase in per-capita government revenue in Afghanistan in 2002 ($24.49 million) is associated with a reduction in the under-5 mortality rate by 12.35 deaths per 1000 births and 13,094 lives saved. This increase is associated with a decrease in the maternal mortality ratio of 9.3 deaths per 100,000 live births and 99 maternal deaths averted. Increasing government revenue can directly impact mortality, especially in countries with low per- capita government revenues. The results presented in this study could be used for economic, social and governance reporting by multinational companies and for evidence-based policymaking and advocacy.

No abstract

UNU-WIDER employs a fair use policy for reasonable reproduction of UNU-WIDER copyrighted content-such as the reproduction of a table or a figure, and/or text not exceeding 400 words-with due acknowledgement of the original source, without requiring explicit permission from the copyright holder.