The Differential Impact of Democracy on Tax Revenues in Developing and Developed Countries

Rashid, Harun Ur; Warsame, Hussein A.; Khan, Shahid

doi:10.1080/01900692.2020.1741616

Cited by 13 publications

(8 citation statements)

References 26 publications

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“…The lack of a significant correlation between democracy and taxes is also conveyed by Mulligan, Gil, & Salai Martin (2014). Although it has no effect, the results of the coefficients in this study indicate that there is a positive relationship between political stability and tax revenue as described in previous literature such as (Shabbir, Anwar, & Adil (2016); Ehrhart (2011);and Rashid, Warsame, & Khan (2020)).…”

Section: Determinants Of Foreign Direct Investment and Its Implicatio...supporting

confidence: 68%

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Determinants of foreign direct investment and its implications on tax revenue in Indonesia

Wijaya¹,

Dewi²

2022

JPPI

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This study aims to examine the effect of market size, trade openness, inflation rate, political stability, corruption, population, and status of human capital on tax revenue with Foreign Direct Investment (FDI) as an intervening variable. This research is quantitative research with a multiplier linear regression model. The sample used in this study includes the provinces in Indonesia. The sample was carried out from 2014 to 2019 using a purposive sampling method, resulting in 180 observations. The research model was tested using two-panel data regression models, namely FEM – GLS Heteros and Autoregressive and Random Effect models (REM). The results show that: 1) market size, trade openness, and the level of human capital have a positive effect on FDI inflows; 2)market size, trade(openness), inflation rate, corruption level, population, human capital level, and Foreign Direct Investment (FDI) have a positive effect on tax revenue; and 3) market size (market size), trade (openness), and the level of human resources (human capital) have an indirect effect on tax revenue through Foreign Direct Investment (FDI).

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Section: Determinants Of Foreign Direct Investment and Its Implicatio...supporting

confidence: 68%

“…Democracy has a positive relationship to tax revenue in developed countries, supporting the compatibility perspective that democracy produces growth produces economic growth (Rashid, Warsame, & Khan, 2020). Meanwhile, democracy is needed in developing countries.…”

Section: Determinants Of Foreign Direct Investment and Its Implicatio...mentioning

confidence: 73%

Determinants of foreign direct investment and its implications on tax revenue in Indonesia

Wijaya¹,

Dewi²

2022

JPPI

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“…Therefore, money distributed within an economy increases the cycle of money many times. The reason why local money increases the cycle of money is obvious according to Equation (4) of the general index of the cycle of money (Rashid et al 2020;Siegmeier et al 2018;Sikka 2018;Tuter 2020;Van de Vijver et al 2020;Wright et al 2017).…”

Section: Methodsmentioning

confidence: 99%

The Index of the Cycle of Money: The Case of Switzerland

Challoumis

2024

JRFM

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This article focuses on the study of issues related to the functionality and structure of an economy. To achieve this, the theory of the cycle of money is used. The structural features of an economy are reflected in its operational characteristics, and vice versa. The index of the cycle of money indexes how well an economic system can counteract a financial crisis and characterizes how well structured a country’s economy is. Calculations of the index of the cycle of money in Switzerland were compared with the global average index. The results showed that Switzerland is close to the global average; therefore, it has an excellent economy and is equipped to face any economic crisis. The applied methodology abides by theoretical, mathematical, statistical, and econometrical outcomes. This work is significant as it demonstrates the strength of Switzerland’s economy in response to a potential crisis. Prior case studies were reviewed from Latvia, Bulgaria, Serbia, Thailand, Greece, Montenegro, and many other countries. This study postulates that companies with high capital should invest in manufacturing and high technology sectors that should be subject to fewer taxes; this approach facilitates a better distribution of money to the economy by allowing small companies to service the remaining economic activities. The period used for compilations in this study was the global recession of 2007–2017. The reviewed case study results are from a project studying multiple countries, and at present, this article presents the only study about Switzerland’s index of the cycle of money.

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“…While explaining the importance of government integrity, Torgler and Schneider (2009) claimed that policymakers often support effective enforcement of governance codes to help deal with the issues of shadow economy/tax evasion and enhance the tax-paying motivation of individuals and organizations (Shafer, Wang, & Hsieh, 2020). Prior research suggested that a lack of institutional quality might increase tax evasion (Richardson (2008), as poor democracy has been observed to most negatively affect tax revenues in developing countries (Rashid, Warsame, & Khan, 2020). Torgler and Schneider (2009) stated that:…”

Section: Government Integritymentioning

confidence: 99%

Does Economic Freedom Matter in Tax Evasion? Empirical Evidence from Asian Countries

Rashid,

Islam

2024

Preprint

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The heterogeneity of Asian governance—stemming from poor administration and tax evasion—affects the business climate, which in turn, causes underinvestment and low tax-to-GDP ratios in the private sector. Due to a dearth of research on tax evasion in Asian countries, this study aims to investigate the relationship between economic freedom and tax evasion. To this end, this study draws upon the socioeconomic theory and applies a variety of econometric methods to analyze data comprising 414 observations from 23 Asian countries between 2001 and 2018. The empirical analysis revealed that the rate of tax evasion is negatively correlated with the level of economic freedom. More specifically, higher government integrity, lower fiscal freedom (tax rate), higher monetary freedom, and investment freedom significantly reduce tax evasion. The findings suggest that Asian governments undertake a robust corporate governance strategy to promote economic freedom and enable stockholders to protect their rights and influence the decision-making process of taxpayers in a bid to reduce tax evasion to a significant level. Moreover, the findings offer valuable insights to governments, tax authorities, and researchers in the formulation of economic policies geared at reducing tax evasion. JEL Classification: H26, O17, A14

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The Differential Impact of Democracy on Tax Revenues in Developing and Developed Countries

Cited by 13 publications

References 26 publications

Determinants of foreign direct investment and its implications on tax revenue in Indonesia

Determinants of foreign direct investment and its implications on tax revenue in Indonesia

The Index of the Cycle of Money: The Case of Switzerland

Does Economic Freedom Matter in Tax Evasion? Empirical Evidence from Asian Countries

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