Sovereign Rents and the Quality of Tax Policy and Administration
The availability of windfall revenues from natural resource exports or foreign aid potentially weakens governments' incentives to design efficient tax systems. Cross-country data for developing countries provide evidence for this hypothesis, u...
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| Format: | Policy Research Working Paper |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2008/11/10002285/sovereign-rents-quality-tax-policy-administration http://hdl.handle.net/10986/6353 |
| Summary: | The availability of windfall revenues
from natural resource exports or foreign aid potentially
weakens governments' incentives to design efficient tax
systems. Cross-country data for developing countries provide
evidence for this hypothesis, using a World Bank indicator
of "efficiency of revenue mobilization."
Aid's negative effects on the quality of tax systems
are robust to correcting for potential reverse causality, to
changes in the sample, and to alternative estimation
methods. Fuel export revenues are also associated with
lower-quality tax policy and administration, but this
finding is somewhat sensitive to outliers. Non-fuel resource
exports, in contrast, show no relationship to the efficiency
of revenue mobilization. |
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