Resource Blessing, Revenue Curse? Domestic Revenue Effort in Resource-Rich Countries
IMF Working Papers, January 14, 2014
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- Resource Blessing, Revenue Curse? Domestic Revenue Effort in Resource-Rich Countries
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Bibliographic details
- Authors: Ernesto Crivelli, Sanjeev Gupta
- Published: January 14, 2014
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484351178.001
Summary and research design
- Dataset: newly constructed revenue dataset of 35 resource-rich countries for the period 1992-2009.
- Objective: analyze the impact of expanding resource revenues on different types of domestic (non resource) tax revenues.
Key empirical findings
- There is a statistically significant negative relationship between resource revenues and total domestic (non resource) revenues, including for the major tax components.
- Magnitude: For each additional percentage point of GDP in resource revenues, there is a reduction in domestic (non resource) revenues of about 0.3 percentage points of GDP.
- Channels:
- Primary: reduced effort on taxes on goods and services—in particular, the VAT.
- Secondary: smaller negative impact on corporate income taxes and trade taxes.
Policy-relevant implications
- Resource revenue expansion can undermine domestic revenue mobilization by weakening effort on major nonresource taxes, especially the VAT.
- Strengthening tax effort on consumption taxes (including VAT) and corporate income and trade taxes may be necessary to offset revenue erosion associated with higher resource revenues.
Publication
- Authors: Ernesto Crivelli, Sanjeev Gupta
- Date: January 14, 2014
- Series: IMF Working Papers; Working Paper No. 2014/005
- Pages: 29
- DOI: https://doi.org/10.5089/9781484351178.001
Source: IMF Working Paper "Resource Blessing, Revenue Curse? Domestic Revenue Effort in Resource-Rich Countries" (Ernesto Crivelli, Sanjeev Gupta, January 14, 2014).