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

34 Pages Posted: 20 Jan 2017

See all articles by Vitor Gaspar

Vitor Gaspar

European Commission

Laura Jaramillo

International Monetary Fund (IMF)

Philippe Wingender

International Monetary Fund (IMF) - Fiscal Affairs Department

Date Written: December 2016

Abstract

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.

Keywords: Taxation, Spain, China, Colombia, Nigeria, Income taxes, Tax administration, Political economy, Cross country analysis, income per capita, taxation, development, institutions, political economy

JEL Classification: D70, H11, H26, O10, O43

Suggested Citation

Gaspar, Vitor and Jaramillo, Laura and Wingender, Philippe, Political Institutions, State Building, and Tax Capacity: Crossing the Tipping Point (December 2016). IMF Working Paper No. 16/233, Available at SSRN: https://ssrn.com/abstract=2902727

Vitor Gaspar (Contact Author)

European Commission ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
+49 69 1344 7200 (Phone)
+49 69 1344 6575 (Fax)

Laura Jaramillo

International Monetary Fund (IMF) ( email )

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

Philippe Wingender

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

700 19th Street, NW
Washington, DC 20431
United States
202-623-9831 (Phone)
202-623-4199 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
39
Abstract Views
372
PlumX Metrics