IMF Working Papers

Political Institutions, State Building, and Tax Capacity: Crossing the Tipping Point

By Vitor Gaspar, Laura Jaramillo, Philippe Wingender

December 2, 2016

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Vitor Gaspar, Laura Jaramillo, and Philippe Wingender. Political Institutions, State Building, and Tax Capacity: Crossing the Tipping Point, (USA: International Monetary Fund, 2016) accessed November 8, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

An empirical finding by Gaspar, Jaramillo and Wingender (2016) shows that once countries cross a tax-to-GDP threshold of around 12¾ percent, real GDP per capita increases sharply and in a sustained manner over the following decade. In this paper, we attempt via four case studies—Spain, China, Colombia, and Nigeria—to illustrate that the improvements in tax capacity have been part of a deeper process of state capacity building. We discuss the political conditions that supported tax capacity building, highlighting three important political ingredients: constitutive institutions, inclusive politics and credible leadership.

Subject: Fiscal policy, Revenue administration, Subnational tax, Tax administration core functions, Tax return filing compliance, Taxes

Keywords: Development, Global, Government activity, Income per capita, Income tax, Institutions, Lagos State government, Political economy, Progressive tax, Real GDP, State revenue staff, Subnational tax, Tax administration core functions, Tax capacity, Tax reform, Tax return filing compliance, Tax threshold, Taxation, UDC government, WP

Publication Details

  • Pages:

    33

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2016/233

  • Stock No:

    WPIEA2016233

  • ISBN:

    9781475558142

  • ISSN:

    1018-5941

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