Tax Policy for Emerging Markets: Developing Countries

Tanzi, Vito; Zee, Howell H.

doi:10.17310/ntj.2000.2.07

Cited by 240 publications

(170 citation statements)

References 3 publications

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“…In addition, Gupta (1967) and Nomura (1991Nomura ( , 1995 have observed that the rise in revenue collection goes hand in hand with economic growth. Burgess and Stern (1993), Tanzi and Zee (2000), Fox and Gurley (2005) find a positive correlation between tax revenue and GDP per capita. This evidence ties in with Wagner's law of increasing state activity (Bird 1971), which states that government activities grow with the economic development of a country over time, through increasing public expenditure to satisfy social needs.…”

Section: Economic Determinants Of Social Spendingmentioning

confidence: 98%

Determinants of social spending in Latin America during and after the Washington consensus: a dynamic panel error-correction model analysis

Martín-Mayoral

Sastre

2017

Lat Am Econ Rev

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This paper examines the determinants of social spending in Latin America during the period 1990-2012 and how they differed between the years of the Washington Consensus (1990Consensus ( -2000 and the period that followed (2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012). Special attention is also paid to the evaluation of convergence towards a common upper-bounded steady state (absolute beta convergence) or to specific steady states conditioned by their country's specific determinants (conditional beta convergence). We estimate a panel error-correction version of an autoregressive distributed lag model to identify the long-term relationships between social expenditure and its determinants. Generalised methods of moments estimators are used to control the endogeneity of the regressors. Results indicate that Latin American social spending follows a conditional beta convergence process over the Washington consensus period that was mainly driven by structural differences in fiscal burdens and external debt, while during the second period it was explained by conjunctural differences in the fiscal burden, GDP per capita and the growth of trade and capital openness.

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Section: Economic Determinants Of Social Spendingmentioning

confidence: 98%

Determinants of social spending in Latin America during and after the Washington consensus: a dynamic panel error-correction model analysis

Martín-Mayoral

Sastre

2017

Lat Am Econ Rev

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“…In the benchmark model, we set Ψ = 0.25, which makes the equilibrium tax rate around 18%. Tanzi and Zee (2000) report that the average share of tax revenue to GDP in developing countries is about 18%. We also examine cases where Ψ = 0.20 and Ψ = 0.33.…”

Section: Numerical Examplesmentioning

confidence: 99%

Inequality, extractive institutions, and growth in nondemocratic regimes

2016

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This study investigates the effect of inequality on economic growth in nondemocratic regimes. We provide a model in which a self-interested ruler chooses an institution that constrains his or her policy choice. The ruler must care about the support share of citizens in order to keep power. Under an extractive institution, the ruler can extract a large share of citizens' wealth, but faces a high probability of losing power because of low public support. We show that inequality affects the ruler's trade-off between the expropriation of citizens' wealth and his or her hold on power. Large inequality among citizens makes the support share for the ruler inelastic with respect to his or her choice of institution. Thus, the ruler chooses an extractive institution, which impedes investment and growth. These results provide an explanation for the negative relationship between inequality and growth and the negative relationship between inequality and the quality of institutions, both of which are observed in nondemocratic countries.JEL classification: O11, D31, P14, P16

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“…Some scholars maintain that paying taxes is not in the narrow personal interests of the wealthy (Bird, Martinez-Vazquez & Togler, 2008). Khatty and Rao (2002) are of the view that the wealthy and high income in Latin America are able to simply exempt themselves from taxation, a view shared by Tanzi and Zee (2000) who contend that wealthy and high income taxpayers can easily circumvent tax laws in Latin America. This would explain the phenomenon of Latin America collecting little income tax in spite of having the highest income tax rates in the world (World Bank, 2008).…”

Section: Social Contractmentioning

confidence: 99%

“…The Income Tax variable is used as a control variable. It is thought that countries with the administrative capacity and political will to enforce an income tax will be less reliant on international trade taxes (Tanzi & Zee, 2000). Trade openness is another of the independent variables.…”

Section: Ordinary Least Squares Regression Variablesmentioning

confidence: 99%

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Determinants of Latin America’s Overreliance on International Trade Taxation

McCoon

2015

AFR

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This paper investigates the determinants of Latin America's overreliance on international trade taxation as a source of governmental revenue. Latin America, more than any other region of the world relies on international trade taxation as a source for governmental revenue. A number of hypotheses are tested including ordinary least squares regressions of the effect of income inequality on the extent to which a country relies on international trade taxation as a source of governmental revenue. It is hypothesized that counties with high levels of income inequality have difficulty collecting income taxes and accordingly disproportionately rely on international trade taxation. The analysis indicates that there is a statistically significant correlation between Latin America's high levels of income inequality and its reliance on international trade taxation as a source of governmental revenue. As a consequence of Latin America's excessive reliance on international trade taxes further trade liberalization in the region will be unlikely.

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Tax Policy for Emerging Markets: Developing Countries

Cited by 240 publications

References 3 publications

Determinants of social spending in Latin America during and after the Washington consensus: a dynamic panel error-correction model analysis

Determinants of social spending in Latin America during and after the Washington consensus: a dynamic panel error-correction model analysis

Inequality, extractive institutions, and growth in nondemocratic regimes

Determinants of Latin America’s Overreliance on International Trade Taxation

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