Resource Blessing, Revenue Curse? Domestic Revenue Effort in Resource-Rich Countries

30 Pages Posted: 11 Feb 2014

See all articles by Ernesto Crivelli

Ernesto Crivelli

International Monetary Fund (IMF)

Sanjeev Gupta

International Monetary Fund (IMF) - Fiscal Affairs Department

Date Written: January 2014

Abstract

This paper uses a newly constructed revenue dataset of 35 resource-rich countries for the period 1992-2009 to analyze the impact of expanding resource revenues on different types of domestic (non resource) tax revenues. Overall, we find a statistically significant negative relationship between resource revenues and total domestic (non resource) revenues, including for the major tax components. 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. We find this primarily occurs through reduced effort on taxes on goods and services - in particular, the VAT - followed by a smaller negative impact on corporate income and trade taxes.

Keywords: Natural resources, Revenues, Tax revenues, Value added tax, resource revenue, taxation, tax effort, fiscal affairs, tax rates, fiscal affairs department, tax policy, tax system, foreign debt, tax base, fiscal framework, tax burden, tax systems, tax administration, fiscal sustainability, tax ratio, fiscal effort, fiscal deficits, tax bases, fiscal regimes, foreign indebtedness, revenue collection, fiscal impact, public spending, fiscal policy, formal sector

JEL Classification: H20, Q33, Q38

Suggested Citation

Crivelli, Ernesto and Gupta, Sanjeev, Resource Blessing, Revenue Curse? Domestic Revenue Effort in Resource-Rich Countries (January 2014). IMF Working Paper No. 14/5, Available at SSRN: https://ssrn.com/abstract=2393605

Ernesto Crivelli (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Sanjeev Gupta

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

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