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Tax Reform in Developing Countries
In recent decades countries around the world have seen a wide diversity of tax reforms, both in major systematic changes and through more specific areas of tax, such as value-added and income tax. The results of these reforms, however, have been unequal and many issues remain unresolved. With advances in globalization, technology and regional integration, the issue of adapting tax systems in developing countries to new economic environments is becoming ever more pressing.
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Contributors
Contents
More Information
In recent decades countries around the world have seen a wide diversity of tax reforms, both in major systematic changes and through more specific areas of tax, such as value-added and income tax. The results of these reforms, however, have been unequal and many issues remain unresolved. With advances in globalization, technology and regional integration, the issue of adapting tax systems in developing countries to new economic environments is becoming ever more pressing.
This collection combines the best research from the past three decades on tax reform in developing countries to highlight the state of knowledge of tax reform, analyse useful policy options and present new and critical approaches to this critical issue.
This collection combines the best research from the past three decades on tax reform in developing countries to highlight the state of knowledge of tax reform, analyse useful policy options and present new and critical approaches to this critical issue.
Contributors
49 articles, dating from 1984 to 2014
Contributors include: R. Bahl, R. Bird, R. Gordon, M. Keen, T. Piketty, N. Stern, J. Stiglitz, V. Tanzi
Contributors include: R. Bahl, R. Bird, R. Gordon, M. Keen, T. Piketty, N. Stern, J. Stiglitz, V. Tanzi
Contents
Contents:
Acknowledgements
Introduction
James Alm and Jorge Martinez-Vazquez
PART I TRENDS IN TAX STRUCTURE
1. Roy W. Bahl and Richard M. Bird (2008), ‘Tax Policy in Developing Countries: Looking Back—and Forward’, National Tax Journal, LXI (2), June, 279–301
2. Saeid Mahdavi (2008), ‘The Level and Composition of Tax Revenue in Developing Countries: Evidence from Unbalanced Panel Data’, International Review of Economics and Finance, 17 (4), October, 607–17
3. Roger Gordon and Wei Li (2009), ‘Tax Structures in Developing Countries: Many Puzzles and a Possible Explanation’, Journal of Public Economics, 93 (7–8), August, 855–66
4. Michael Keen and Ben Lockwood (2010), ‘The Value Added Tax: Its Causes and Consequences’, Journal of Development Economics, 92 (2), July, 138–51
5. Jorge Martinez-Vazquez, Violeta Vulovic, and Yongzheng Liu (2011), ‘Direct Versus Indirect Taxation: Trends, Theory, and Economic Significance’,in Emilio Albi and Jorge Martinez-Vazquez (eds), The Elgar Guide to Tax Systems, Chapter 2, Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing Ltd, 37–92
6. Klara Sabirianova Peter, Steve Buttrick, and Denvil Duncan (2010), ‘Global Reform of Personal Income Taxation, 1981–2005: Evidence from 189 Countries’, National Tax Journal, 63 (3), September, 447–78
7. Jorge Martinez-Vazquez and Robert M. McNab (2000), ‘The Tax Reform Experiment in Transitional Countries’, National Tax Journal, LIII (2), June, 273–98
8. Vito Tanzi and Howell H. Zee (2000), ‘Tax Policy for Emerging Markets: Developing Countries’, National Tax Journal, LIII (2), June, 299–322
PART II TAX REFORM AND REVENUES
9. Richard M. Bird, Jorge Martinez-Vazquez and Benno Torgler (2008), ‘Tax Effort in Developing Countries and High Income Countries: The Impact of Corruption, Voice and Accountability’, Economic Analysis and Policy, 38 (1), March, 55–71
10. Emmanuelle Auriol and Michael Warlters (2005), ‘Taxation Base in Developing Countries’, Journal of Public Economics, 89 (4), April, 625–46
PART III TAX REFORM AND INCOME DISTRIBUTION
11. Thomas Piketty and Nancy Qian (2009), ‘Income Inequality and Progressive Income Taxation in China and India, 1986–2015’, American Economic Journal: Applied Economics, 1 (2), April, 53–63
12. Jean-Yves Duclos, Paul Makdissi and Abdelkrim Araar (2014), ‘Pro-Poor Indirect Tax Reforms, with an Application to Mexico’, International Tax and Public Finance, 21 (1), February, 87–118
13. Dillon Alleyne (2007), ‘The Evolution of Jamaica’s Tax Burden’, Public Finance Review, 35 (1), January, 150–71
14. Jorge Martínez-Vázquez, Violeta Vulovic and Blanca Moreno-Dodson (2012), ‘The Impact of Tax and Expenditure Policies on Income Distribution: Evidence from a Large Panel of Countries’, Hacienda Pública Española/Review of Public Economics, 200 (4), 95–130
15. Richard M. Bird and Eric M. Zolt (2005), ‘Redistribution via Taxation: The Limited Role of the Personal Income Tax in Developing Countries’, UCLA Law Review, 52 (6), August, 1627–95
16. Norman Gemmell and Oliver Morrissey (2005), ‘Distribution and Poverty Impacts of Tax Structure Reform in Developing Countries: How Little We Know’, Development Policy Review, 23 (2), March, 131–44
17. Jorge Martinez-Vazquez (2008), ‘The Impact of Budgets on the Poor: Tax and Expenditure Benefit Incidence Analysis’, in Blanca Moreno-Dodson and Quentin Wodon (eds), Public Finance for Poverty Reduction, Chapter 5, Washington, DC: The World Bank, 113–62
PART IV TAX REFORM, EFFICIENCY AND GROWTH
18. Ehtisham Ahmad and Nicholas Stern (1984), ‘The Theory of Reform and Indian Indirect Taxes’, Journal of Public Economics, 25 (3), December, 259–98
19. David M. Newbery (1997), ‘Optimal Tax Rates and Tax Design during Systemic Reform’, Journal of Public Economics, 63 (2), January, 177–206
20. M. Shahe Emran and Joseph E. Stiglitz (2005), ‘On Selective Indirect Tax Reform in Developing Countries’, Journal of Public Economics, 89 (4), April, 599–623
21. Michael Keen (2008), ‘VAT, Tariffs, and Withholding: Border Taxes and Informality in Developing Countries’, Journal of Public Economics, 92 (10–11), October, 1892–906
22. Emmanuelle Auriol and Michael Warlters (2012), ‘The Marginal Cost of Public Funds and Tax Reform in Africa’, Journal of Development Economics, 97 (1), January, 58–72
23. Young Lee and Roger H. Gordon (2005), ‘Tax Structure and Economic Growth’, Journal of Public Economics, 89 (5–6), June, 1027–43
24. Jens Matthias Arnold, Bert Brys, Christopher Heady, Åsa Johansson, Cyrille Schwellnus and Laura Vartia (2011), ‘Tax Policy for Economic Recovery and Growth’, Economic Journal, 121 (550), February, F59–F80
Index
Volume II
Acknowledgements
An introduction to both volumes by the editors appears in Volume I
PART I TAX REFORM AND FOREIGN DIRECT INVESTMENT
1. S.M. Ali Abbas and Alexander Klemm (2013), ‘A Partial Race to the Bottom: Corporate Tax Developments in Emerging and
Developing Economies’, International Tax and Public Finance, 20 (4), August, 596–617
2. Céline Azémar and Andrew Delios (2008), ‘Tax Competition and FDI: The Special Case of Developing Countries’, Journal of the Japanese and International Economies, 22 (1), March, 85–108
3. Timothy Goodspeed, Jorge Martinez-Vazquez and Li Zhang (2011), ‘Public Policies and FDI Location: Differences between Developing and Developed Countries’, FinanzArchiv/Public Finance Analysis, 67 (2), 171–91
4. Howell H. Zee, Janet G. Stotsky and Eduardo Ley (2002), ‘Tax Incentives for Business Investment: A Primer for Policy Makers in Developing Countries’, World Development, 30 (9), September, 1497–1516
5. Alexander Klemm (2010), ‘Causes, Benefits, and Risks of Business Tax Incentives’, International Tax and Public Finance, 17 (3), June, 315–36
PART II TAX REFORM AND THE HARD-TO-TAX
6. James Alm, Jorge Martinez-Vazquez and Friedrich Schneider (2004), ‘“Sizing” the Problem of the Hard-to-Tax’, in James Alm, Jorge Martinez-Vazquez and Sally Wallace (eds), Taxing the Hardto- Tax: Lessons from Theory and Practice, Chapter 2, Amsterdam, the Netherlands: Elsevier, 11–75
7. James Alm, Roy Bahl and Matthew N. Murray (1991), ‘Tax Base Erosion in Developing Countries’, Economic Development and Cultural Change, 39 (4), July, 849–72
8. Benjamin A. Olken and Monica Singhal (2011), ‘Informal Taxation’, American Economic Journal: Applied Economics, 3 (4), October, 1–28
9. Arindam Das-Gupta, Shanto Ghosh and Dilip Mookherjee (2004), ‘Tax Administration Reform and Taxpayer Compliance in India’, International Tax and Public Finance, 11 (5), September, 575–600
10. Henrik J. Kleven and Mazhar Waseem (2013), ‘Using Notches to Uncover Optimization Frictions and Structural Elasticities: Theory and Evidence from Pakistan’, Quarterly Journal of Economics, 128 (2), May, 669–723
PART III TAX REFORM AND SUBNATIONAL TAXES
11. Roy Bahl and Richard Bird (2008), ‘Subnational Taxes in Developing Countries: The Way Forward’, Public Budgeting and Finance, 28 (4), Winter, 1–25
12. James Alm and Yongzheng Liu (2014), ‘China’s Tax-for-Fee Reform and Village Inequality’, Oxford Development Studies, 42 (1), 38–64
13. Jorge Martínez-Vázquez (2007), ‘Revenue Assignments in the Practice of Fiscal Decentralization’, in Núria Bosch and José M. Durán (eds), Fiscal Federalism and Political Decentralization: Lessons from Spain, Germany and Canada, Chapter 2, Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing Ltd, 27–55
PART IV TAX REFORM AND TAX ADMINISTRATION
14. Richard Goode (1993), ‘Tax Advice to Developing Countries: An Historical Survey’, World Development, 21 (1), January, 37–53
15. Knud J. Munk (2008), ‘Tax-Tariff Reform with Costs of Tax Administration’, International Tax and Public Finance, 15 (6), December, 647–67
16. Lawrence W. Kenny and Stanley L. Winer (2006), ‘Tax Systems in the World: An Empirical Investigation into the Importance of Tax Bases, Administration Costs, Scale and Political Regime’, International Tax and Public Finance, 13 (2–3), May, 181–215
17. Charles L. Vehorn (2011), ‘Fiscal Adjustment in Developing Countries through Tax Administration Reform’, Journal of Developing Areas, 45 (1), Fall, 323–38
18. Richard M. Bird (2004), ‘Administrative Dimensions of Tax Reform’, Asia-Pacific Tax Bulletin, 10 (3), March, 134–50
19. Jorge Martinez-Vazquez and Andrey Timofeev (2010), ‘Choosing between Centralized and Decentralized Models of Tax Administration’, International Journal of Public Administration, 33 (12–13), 601–19
PART V THE POLITICS OF TAX REFORM
20. Odd-Helge Fjeldstad and Mick Moore (2008), ‘Tax Reform and State-Building in a Globalised World’, in Deborah A. Bräutigam, Odd-Helge Fjeldstad and Mick Moore (eds), Taxation and State- Building in Developing Countries: Capacity and Consent, Chapter 10, Cambridge, UK: Cambridge University Press, 235–60, bibliography
21. John Toye (2000), ‘Fiscal Crisis and Fiscal Reform in Developing Countries’, Cambridge Journal of Economics, 24 (1), January, 21–44
22. Micael Castanheira, Gaëtan Nicodème and Paola Profeta (2012),’ On the Political Economics of Tax Reforms: Survey and Empirical Assessment’,International Tax and Public Finance, 19 (4), August, 598–624
23. Walter Hettich and Stanley L. Winer (1988), ‘Economic and Political Foundations of Tax Structure’, American Economic Review, 78 (4), September, 701–12
24. Antonis Adam (2009), ‘Fiscal Reliance on Tariff Revenues: In Search of a Political Economy Explanation?’, Review of Development Economics, 13 (4), November, 610–25
25. Malcolm Gillis (1985), ‘Micro and Macroeconomics of Tax Reform: Indonesia’, Journal of Development Economics, 19 (3), December, 221–54
Index
Acknowledgements
Introduction
James Alm and Jorge Martinez-Vazquez
PART I TRENDS IN TAX STRUCTURE
1. Roy W. Bahl and Richard M. Bird (2008), ‘Tax Policy in Developing Countries: Looking Back—and Forward’, National Tax Journal, LXI (2), June, 279–301
2. Saeid Mahdavi (2008), ‘The Level and Composition of Tax Revenue in Developing Countries: Evidence from Unbalanced Panel Data’, International Review of Economics and Finance, 17 (4), October, 607–17
3. Roger Gordon and Wei Li (2009), ‘Tax Structures in Developing Countries: Many Puzzles and a Possible Explanation’, Journal of Public Economics, 93 (7–8), August, 855–66
4. Michael Keen and Ben Lockwood (2010), ‘The Value Added Tax: Its Causes and Consequences’, Journal of Development Economics, 92 (2), July, 138–51
5. Jorge Martinez-Vazquez, Violeta Vulovic, and Yongzheng Liu (2011), ‘Direct Versus Indirect Taxation: Trends, Theory, and Economic Significance’,in Emilio Albi and Jorge Martinez-Vazquez (eds), The Elgar Guide to Tax Systems, Chapter 2, Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing Ltd, 37–92
6. Klara Sabirianova Peter, Steve Buttrick, and Denvil Duncan (2010), ‘Global Reform of Personal Income Taxation, 1981–2005: Evidence from 189 Countries’, National Tax Journal, 63 (3), September, 447–78
7. Jorge Martinez-Vazquez and Robert M. McNab (2000), ‘The Tax Reform Experiment in Transitional Countries’, National Tax Journal, LIII (2), June, 273–98
8. Vito Tanzi and Howell H. Zee (2000), ‘Tax Policy for Emerging Markets: Developing Countries’, National Tax Journal, LIII (2), June, 299–322
PART II TAX REFORM AND REVENUES
9. Richard M. Bird, Jorge Martinez-Vazquez and Benno Torgler (2008), ‘Tax Effort in Developing Countries and High Income Countries: The Impact of Corruption, Voice and Accountability’, Economic Analysis and Policy, 38 (1), March, 55–71
10. Emmanuelle Auriol and Michael Warlters (2005), ‘Taxation Base in Developing Countries’, Journal of Public Economics, 89 (4), April, 625–46
PART III TAX REFORM AND INCOME DISTRIBUTION
11. Thomas Piketty and Nancy Qian (2009), ‘Income Inequality and Progressive Income Taxation in China and India, 1986–2015’, American Economic Journal: Applied Economics, 1 (2), April, 53–63
12. Jean-Yves Duclos, Paul Makdissi and Abdelkrim Araar (2014), ‘Pro-Poor Indirect Tax Reforms, with an Application to Mexico’, International Tax and Public Finance, 21 (1), February, 87–118
13. Dillon Alleyne (2007), ‘The Evolution of Jamaica’s Tax Burden’, Public Finance Review, 35 (1), January, 150–71
14. Jorge Martínez-Vázquez, Violeta Vulovic and Blanca Moreno-Dodson (2012), ‘The Impact of Tax and Expenditure Policies on Income Distribution: Evidence from a Large Panel of Countries’, Hacienda Pública Española/Review of Public Economics, 200 (4), 95–130
15. Richard M. Bird and Eric M. Zolt (2005), ‘Redistribution via Taxation: The Limited Role of the Personal Income Tax in Developing Countries’, UCLA Law Review, 52 (6), August, 1627–95
16. Norman Gemmell and Oliver Morrissey (2005), ‘Distribution and Poverty Impacts of Tax Structure Reform in Developing Countries: How Little We Know’, Development Policy Review, 23 (2), March, 131–44
17. Jorge Martinez-Vazquez (2008), ‘The Impact of Budgets on the Poor: Tax and Expenditure Benefit Incidence Analysis’, in Blanca Moreno-Dodson and Quentin Wodon (eds), Public Finance for Poverty Reduction, Chapter 5, Washington, DC: The World Bank, 113–62
PART IV TAX REFORM, EFFICIENCY AND GROWTH
18. Ehtisham Ahmad and Nicholas Stern (1984), ‘The Theory of Reform and Indian Indirect Taxes’, Journal of Public Economics, 25 (3), December, 259–98
19. David M. Newbery (1997), ‘Optimal Tax Rates and Tax Design during Systemic Reform’, Journal of Public Economics, 63 (2), January, 177–206
20. M. Shahe Emran and Joseph E. Stiglitz (2005), ‘On Selective Indirect Tax Reform in Developing Countries’, Journal of Public Economics, 89 (4), April, 599–623
21. Michael Keen (2008), ‘VAT, Tariffs, and Withholding: Border Taxes and Informality in Developing Countries’, Journal of Public Economics, 92 (10–11), October, 1892–906
22. Emmanuelle Auriol and Michael Warlters (2012), ‘The Marginal Cost of Public Funds and Tax Reform in Africa’, Journal of Development Economics, 97 (1), January, 58–72
23. Young Lee and Roger H. Gordon (2005), ‘Tax Structure and Economic Growth’, Journal of Public Economics, 89 (5–6), June, 1027–43
24. Jens Matthias Arnold, Bert Brys, Christopher Heady, Åsa Johansson, Cyrille Schwellnus and Laura Vartia (2011), ‘Tax Policy for Economic Recovery and Growth’, Economic Journal, 121 (550), February, F59–F80
Index
Volume II
Acknowledgements
An introduction to both volumes by the editors appears in Volume I
PART I TAX REFORM AND FOREIGN DIRECT INVESTMENT
1. S.M. Ali Abbas and Alexander Klemm (2013), ‘A Partial Race to the Bottom: Corporate Tax Developments in Emerging and
Developing Economies’, International Tax and Public Finance, 20 (4), August, 596–617
2. Céline Azémar and Andrew Delios (2008), ‘Tax Competition and FDI: The Special Case of Developing Countries’, Journal of the Japanese and International Economies, 22 (1), March, 85–108
3. Timothy Goodspeed, Jorge Martinez-Vazquez and Li Zhang (2011), ‘Public Policies and FDI Location: Differences between Developing and Developed Countries’, FinanzArchiv/Public Finance Analysis, 67 (2), 171–91
4. Howell H. Zee, Janet G. Stotsky and Eduardo Ley (2002), ‘Tax Incentives for Business Investment: A Primer for Policy Makers in Developing Countries’, World Development, 30 (9), September, 1497–1516
5. Alexander Klemm (2010), ‘Causes, Benefits, and Risks of Business Tax Incentives’, International Tax and Public Finance, 17 (3), June, 315–36
PART II TAX REFORM AND THE HARD-TO-TAX
6. James Alm, Jorge Martinez-Vazquez and Friedrich Schneider (2004), ‘“Sizing” the Problem of the Hard-to-Tax’, in James Alm, Jorge Martinez-Vazquez and Sally Wallace (eds), Taxing the Hardto- Tax: Lessons from Theory and Practice, Chapter 2, Amsterdam, the Netherlands: Elsevier, 11–75
7. James Alm, Roy Bahl and Matthew N. Murray (1991), ‘Tax Base Erosion in Developing Countries’, Economic Development and Cultural Change, 39 (4), July, 849–72
8. Benjamin A. Olken and Monica Singhal (2011), ‘Informal Taxation’, American Economic Journal: Applied Economics, 3 (4), October, 1–28
9. Arindam Das-Gupta, Shanto Ghosh and Dilip Mookherjee (2004), ‘Tax Administration Reform and Taxpayer Compliance in India’, International Tax and Public Finance, 11 (5), September, 575–600
10. Henrik J. Kleven and Mazhar Waseem (2013), ‘Using Notches to Uncover Optimization Frictions and Structural Elasticities: Theory and Evidence from Pakistan’, Quarterly Journal of Economics, 128 (2), May, 669–723
PART III TAX REFORM AND SUBNATIONAL TAXES
11. Roy Bahl and Richard Bird (2008), ‘Subnational Taxes in Developing Countries: The Way Forward’, Public Budgeting and Finance, 28 (4), Winter, 1–25
12. James Alm and Yongzheng Liu (2014), ‘China’s Tax-for-Fee Reform and Village Inequality’, Oxford Development Studies, 42 (1), 38–64
13. Jorge Martínez-Vázquez (2007), ‘Revenue Assignments in the Practice of Fiscal Decentralization’, in Núria Bosch and José M. Durán (eds), Fiscal Federalism and Political Decentralization: Lessons from Spain, Germany and Canada, Chapter 2, Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing Ltd, 27–55
PART IV TAX REFORM AND TAX ADMINISTRATION
14. Richard Goode (1993), ‘Tax Advice to Developing Countries: An Historical Survey’, World Development, 21 (1), January, 37–53
15. Knud J. Munk (2008), ‘Tax-Tariff Reform with Costs of Tax Administration’, International Tax and Public Finance, 15 (6), December, 647–67
16. Lawrence W. Kenny and Stanley L. Winer (2006), ‘Tax Systems in the World: An Empirical Investigation into the Importance of Tax Bases, Administration Costs, Scale and Political Regime’, International Tax and Public Finance, 13 (2–3), May, 181–215
17. Charles L. Vehorn (2011), ‘Fiscal Adjustment in Developing Countries through Tax Administration Reform’, Journal of Developing Areas, 45 (1), Fall, 323–38
18. Richard M. Bird (2004), ‘Administrative Dimensions of Tax Reform’, Asia-Pacific Tax Bulletin, 10 (3), March, 134–50
19. Jorge Martinez-Vazquez and Andrey Timofeev (2010), ‘Choosing between Centralized and Decentralized Models of Tax Administration’, International Journal of Public Administration, 33 (12–13), 601–19
PART V THE POLITICS OF TAX REFORM
20. Odd-Helge Fjeldstad and Mick Moore (2008), ‘Tax Reform and State-Building in a Globalised World’, in Deborah A. Bräutigam, Odd-Helge Fjeldstad and Mick Moore (eds), Taxation and State- Building in Developing Countries: Capacity and Consent, Chapter 10, Cambridge, UK: Cambridge University Press, 235–60, bibliography
21. John Toye (2000), ‘Fiscal Crisis and Fiscal Reform in Developing Countries’, Cambridge Journal of Economics, 24 (1), January, 21–44
22. Micael Castanheira, Gaëtan Nicodème and Paola Profeta (2012),’ On the Political Economics of Tax Reforms: Survey and Empirical Assessment’,International Tax and Public Finance, 19 (4), August, 598–624
23. Walter Hettich and Stanley L. Winer (1988), ‘Economic and Political Foundations of Tax Structure’, American Economic Review, 78 (4), September, 701–12
24. Antonis Adam (2009), ‘Fiscal Reliance on Tariff Revenues: In Search of a Political Economy Explanation?’, Review of Development Economics, 13 (4), November, 610–25
25. Malcolm Gillis (1985), ‘Micro and Macroeconomics of Tax Reform: Indonesia’, Journal of Development Economics, 19 (3), December, 221–54
Index
