Export product diversification and tax performance quality in developing countries
- PDF / 735,311 Bytes
- 28 Pages / 439.37 x 666.142 pts Page_size
- 25 Downloads / 265 Views
Export product diversification and tax performance quality in developing countries Sèna Kimm Gnangnon 1 # Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract The current analysis proposes a definition and a measure of the ‘quality of tax performance’, and examines how export product diversification influences tax performance quality in developing countries. Using a sample of 115 developing countries over the period 1981–2014, the empirical exercise shows that export product diversification induces higher quality of tax performance. Furthermore, less developed countries (for example, low-income countries) enjoy a higher positive effect of export product diversification on the quality of tax performance than relatively advanced developing countries. These findings have important policy implications. In particular, they show that while policies for promoting export product diversification are not pure fiscal and tax administration-related measures, they do influence positively the quality of tax performance in developing countries. Keywords Quality of tax performance . Export product diversification . Developing
countries JEL classification F14 . H1
1 Introduction In light of the huge financial needs of developing countries to address their development challenges, a wealth of studies has investigated the factors that help developing countries improve their tax revenue performance (tax performance has usually been measured in the literature by the share of total tax revenue to Gross Domestic Product (GDP)) so as to reduce their dependence on foreign aid. The on-going trade
* Sèna Kimm Gnangnon [email protected]
1
World Trade Organization, Rue de Lausanne 154, CH-1211 Geneva, Switzerland
S. K. Gnangnon
liberalization process, in particular since the creation of the World Trade Organization (WTO) in 1995, and the subsequent potential loss of international trade tax revenue1 in developing countries have led many governments to engage in a tax transition reform process, which entails a modification of the tax structure with a view to reducing the total tax revenue dependence on international trade tax revenue at the benefit of domestic tax revenue. In that respect, a number of studies (e.g., Baunsgaard and Keen 2010; Crivelli 2016; Moller 2016; Waglé 2011) have examined whether the revenue replacement strategy in these countries has been successful. Baunsgaard and Keen (2010) have reported that the replacement rate is low for low-income countries, in contrast with middle-income countries and high-income countries. However, Waglé (2011) has nuanced the findings of Baunsgaard and Keen (2010) and noted that the replacement rate is higher in low-income countries than obtained by Baunsgaard and Keen (2010). Moller (2016) has shown that democratization has helped some lowincome countries enjoy significant tax recovery. Crivelli (2016) has found a strong replacement of domestic tax revenue with trade tax revenue lost for a set of transition economies. Gnangnon and Brun (2019a) have shown that tax transit
Data Loading...
