Government Revenue

According to the Leviathan-Model, fiscal federalism is seen as a binding constraint on a revenue-maximizing government. The competitive pressure of fiscal federalism is supposed to reduce public sector size as compared to unitary states. However, empirical results concerning the Leviathan hypothesis are mixed. This study uses a state and local-level panel data set of Swiss cantons from 1980 to 1998 to empirically analyze the effect of different federalist institutions on the size and structure of government revenue. Because of the considerable tax autonomy of sub-national Swiss governments, it is possible to investigate different mechanisms by which fiscal federalism may influence government size. The results indicate that tax exporting has a revenue expanding effect whereas tax competition favors a smaller size of government. Fragmentation has essentially no effect on the size of government revenue for Swiss cantons. The overall effect of revenue decentralization leads to fewer tax...

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. This paper evaluates the nature and extent of, and possible responses to, two of the central challenges that globalization poses for revenue mobilization in Sub-Saharan Africa (SSA): from corporate tax competition, and from trade liberalization. It does so using a new dataset with features needed to meaningfully address these issues: a distinction between resourcerelated and other revenues, and a disentangling of tariff from commodity tax revenue. Countries' experiences vary quite widely, nonresource revenues have been essentially stagnant. Corporate tax revenues have held up, despite a reduction in rates and evidence of substantial base-narrowing-something of a puzzle-and trade tax revenue reductions have been largely offset by other measures. Options for dealing with the continuation and intensification of the challenges, which the present crisis is likely to accelerate-including through regional cooperation-are discussed. JEL Classification Numbers: F13, H20, O10 1 We thank Sanjeev Gupta for helpful suggestions, and Asegedech WoldeMariam for painstaking research assistance. Views and errors are ours alone, and should not be attributed to the International Monetary Fund, its Executive Board, or its management.

Using a panel of eight large emerging market economies from 1980 to 2015, this paper seeks to assess the causal linkages between government size, unemployment, and inflation. Overall, our results suggest that the government size is positively associated with both unemployment and inflation. The Granger causality runs from the government size to unemployment and to inflation. From our analysis, two aspects stand out. First, the effects of government size on unemployment and inflation depend essentially on how the government size is measured. As long as government consumption spending is considered as the proxy measure of the government size, the government size is significantly and positively correlated with unemployment, and with inflation. Second, indirect taxes, like government consumption spending, have a positive as well
as statistically significant association with unemployment. However, the direct taxes solely exert a strong effect on inflation in the countries considered.

This paper assesses the consequences of two reforms of the French indirect taxation system: a VAT harmonization which is close to initial EC proposals and a carbon tax which aims at decreasing the emissions of carbon dioxide. We simulate the effects of tax reforms using estimates of a model of household expenditure behaviour. Estimation is obtained by using the property of perfect aggregation over households of the Almost Ideal demand system on pooled micro data from the 1978-79, 1984-85, 1989 issues of the French 'Enqu~te Budgets des Families' combined with macro data from the Quarterly National Accounts from 1970 to 1990. Simulations are conducted using a subsample of households from the 1989 consumer survey and generate useful results about the behavioural reactions to tax changes, the impact on government revenue and the distributional effects of the reforms.

Adult literacy, male (% of ages 15 and older) 77 95 72 Adult literacy, female (% of ages 15 and older) 61 87 50 Gross primary enrollment, male (% of age group) 124 115 108 Gross primary enrollment, female (% of age group) 109 113 96 Access to an improved water source (% of pop) 51 79 75 Access to improved sanitation facilities (% of pop)

WP/05/26 Stabilization, Debt, and Fiscal Policy in the Caribbean Ratna Sahay ... author would like to thank the IMF desk economists for the data, Pedro Rodríguez and Ping Wang for help in preparing this paper, and WHD seminar participants, Paul Cashin, Prachi Mishra, Charles ...

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. The econometric literature has been unable to establish a robust association between foreign aid and growth and poverty reduction. In this paper we argue that aid effectiveness must be assessed using methods that go beyond crosscountry regressions. We calibrate a dynamic general equilibrium model that is capable of generating large income gaps between rich and poor countries. The model quantifies three sources of poverty: (i) lack of access to international capital, (ii) low schooling and high fertility (a poverty trap), and (iii) antigrowth domestic fiscal policy. We analyze policies designed to address each source of poverty and estimate and compare the aid cost of implementing the different policies. The policies differ dramatically in the extent and timing of their growth effects, and in the aid cost of their implementation.

Olivier Cadot is a professor of economics at Ecole des Hautes Etudes Commerciales, University of Lausanne, and he is associated with the Centre of Economic Policy Research (cepr) and the Center for Studies and Research in International Development (cerdi); his email address ...

This is a theoretical and empirical study of trade policy in a small open economy with intermediate inputs. The first part develops a theoretical model and obtains expressions for optimal second-best tariffs on an intermediate input when tax revenue is used to provide a public good and all other taxes are unalterable. In the second part, we estimate, for Pakistan, the optimal tariff on sheet steel using the formula developed in the theoretical part. We find that the current level of tariff is considerably higher than the optimal one even after making generous allowances for government's revenue constraint.

We examine the potential for further reform of sales tax and tariffs on final goods and on intermediate inputs in Pakistan. Analysis is conducted at two levels. First, optimal taxes are computed under the assumption that tax revenue is exogenous and pays for a public good, and these are compared with their current levels. Second, we consider two piecemeal reform exercises to examine whether there is further scope for replacing the two tariffs by sales tax in a revenue-neutral way. Both approaches suggest that there is considerable scope for further reducing tariffs on final goods, but not on intermediate inputs.

Empirical analysis of value-added tax revenues on a sample of 34 countries conforms with conventional wisdom from theoretical and case studies. The key implication is that for value-added tax to provide superior revenues, it should be levied in a single rate on as broad a base as possible. And tax administration and enforcement must be tough to ensure compliance. Policy ResearchWotaingPpersdiusaem.ac the findings of work in po and nacowuge the exchange of idea asong Bank staff and alBother interested in devlopntinue These papn dist ibuted bytheRes hAdviKry Staff, cany thenames ofthe authors, reflect only theirviews, and should beused and cited accordingly. Thefindings, interpretations,andconclusions atheauthors'wn. They ghould not be attributed to the Word Bank, its Board of Directors, its managemnat, or any of its manber cosutrics.

This Staff Discussion Note represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management. Staff Discussion Notes are published to elicit comments and to further debate.

The inflow of large quantities of foreign aid into Rwanda since 1994 can have potential adverse effects such as aid dependency via a significant negative effect on tax efforts and on public investments. This paper carries out a theoretical and empirical study to examine these issues. The theoretical part develops a model in which the recipient government decides on the

This paper analyzes the cyclical fluctuations in South Africa in a cross-country context, and studies the impact of the output gap by controlling for export intensity, the debt burden, asset prices, and banking crises. Results show that South Africa’s revenue performance was outstanding during the mid-2000s, and the recent decline in revenue was one of the least among the emerging

This paper applies a disaggregated method for the calculation of the cyclical component of the budget balance for South Africa with an emphasis on the effect of commodity and asset prices, and credit cycle. Results show that the cyclicality of tax revenue is mostly explained by the variations in tax bases. Change in the credit to private sector also has

This paper analyzes Botswana's medium-term fiscal sustainability in view of the expected depletion of diamonds in the future. The analysis shows that in the absence of policy adjustments, Botswana's current fiscal policy strategy is unsustainable over the longer term, which could endanger macroeconomic stability and Botswana's reputation as Africa's success story. Ensuring medium-term sustainability of Botswana's public finances requires stronger revenue collection, through improved revenue administration, greater tax enforcement, and the rationalization of tax exemptions in order to realize the full revenue potential. Opportunities also exist to generate more revenue from the non-mining sector

This paper analyses the cyclical behaviour of fiscal policy in euro-area countries over the 1980-2005 period, focusing on the distinct role of government revenue and expenditure. The estimation of separate fiscal policy reaction functions in good and bad times reveals that, ...

The paper investigates the revenue-expenditure nexus for Ghana. The study covers the period 1980-2013. It examines whether increases in government revenue cause increases in government expenditure or increases in government expenditure cause increases in government revenue. It also examines if changes in government expenditure and revenue have feedback effects on each other. The stationarity test indicates that both variables are stationary at the levels when the test is done with a constant and a trend, and are first difference stationary when the test is done with a constant but no trend. The paper analyses the long-run relationship between government expenditure and government revenue using the Ordinary Least Squares (OLS) method. The short-run relationships between the two variables are tested in a Vector Autoregressive (VAR) framework. The results show a very strong long-and short-run relationship between the variables. The second period lag of the revenue variable shows a negative relationship between government revenue and government expenditure. This indicates the possibility of the absence of Fiscal illusion in every two years of increased government expenditure. Granger causality test is done to determine the direction of the causal relationship between government expenditure and government revenue. The test gives a unidirectional causality running from revenue to expenditure. This implies government revenue causes government expenditure. Therefore, evidence of Tax-spend hypothesis is found. The implication is that, government must improve its revenue generation efforts in order for it to fund its ever increasing expenditure and to control the frequent fiscal slippages.

The purpose of this paper is to perform an indepth
analysis of a strict liability law, Indonesia
Government Regulation No 79/2010. The
enactment of new oil and gas law brings a new
chapter for oil and gas reform in Indonesia. The
new tax law serves as a foundation for the work
of cost recovery in order to maintain the stability
of government revenue, which will provide a
solid basis for oil and gas businesses in the long
run. This idea comes up from the best practice in
the oil and gas business that extraction of oil
which means “There are better, cleaner, more
efficient ways to extract and produce oil and
gas” (http://www.earthworksaction.org). I look
at the relationship between oil lifting, tax
revenue, cost recovery, and Indonesia Crude
Price (ICP). I find that there is significant
relationship between these three variables, in
other words the tax revenue collected by the
government, cost recovery given to the
Contractors, also the ICP will give impact to the
oil and gas productivity.
This paper also briefly explains the externalities
and socio-environmental cost which might arise
as a result of oil and gas extraction. I conclude
that GR 79/2010 has a significant impact on oil
and gas productivity. Thus, I suggest that
Government of Indonesia must be effectively
making better regulation in the sense of
removing ambiguity on its application.
Moreover, it should also encourage oil and gas
companies’ willingness to fairly disclose an oil
spill.

While the issue of earmarking has been widely studied in the context of public finance, there is little analysis of the extent and potential implications of earmarking of foreign aid. This paper attempts to fill this gap by first defining "earmarked foreign aid" as Official Development Assistance (ODA) whose uses are predetermined by the funding source ("ODA earmarked at source"), and then by examining its evolution since the mid 1990s. Using ODA data reported to the OECD-DAC, the paper finds that the share of earmarked ODA in total ODA increased from 29 percent in 1995-2000 to about 38 percent during 2001-2006. For IDA-eligible countries as a group, earmarking increased from about 17 percent to about 25 percent of ODA during the same period. Finally, the paper discusses how earmarking of aid might impact fiscal policy and resource allocation in recipient countries and suggests that further country level studies would be needed to corroborate some identified hypotheses.. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s). They do not necessarily represent the views of the World Bank Group, its Executive Directors, or the countries that they represent and should not be attributed to them.

Recent research suggests that management of the public sector's debt can have important effects on a country's macroeconomic performance. This article provides an overview of the factors that the recent literature has identified as important in determining the optimal composition of the public debt. Based on this analysis, it attempts to establish general guidelines for public debt management in emerging economies. To retain market access and promote domestic financial market development, governments should generally finance themselves at market rates using a wide variety of securities. Beyond this general principle, the optimal composition of the public debt involves a tradeoff between enhancing the government's anti-inflationary credibility and reducing the vulnerability of its budget to macroeconomic shocks. Consequently, the optimal composition of the debt depends on a country's circumstances. Debt should be heavily weighted toward long-term nominal securities for governments that have anti-inflationary credibility and toward long-term indexed debt for those that do not.

The tax regime is one of the most prominent aspects of a country's business environment. In many countries most formal firms are required to file and pay taxes repeatedly throughout the year and must dedicate substantial staff time to the process. Thus it is unsurprising that in the World Bank Enterprise Surveys businesses consistently rank tax rates and the tax administrative process among the most important constraints they face (figure 1). Tax policy and administration are a key part of a country's private sector development strategy. They are also often a political minefield, subject to conflicting objectives.

Nigeria This study examined the impact of fiscal policy on the performance of the manufacturing sector in Nigeria. The study was specifically meant to assess the extent to which government revenue and expenditure impact on the manufacturing output in Nigeria. To achieve these objectives, relevant literatures were reviewed. An expose facto research design was adopted for the study. Time series data were collected from the CBN statistical Bulletin using the desk survey method from 1982 to 2014. The data were analyzed using the ordinary least square multiple regression statistical technique. Result from the analyses revealed that increases in government revenue reduce manufacturing sector output in Nigeria. Finally, Government should increase it expenditure on infrastructural development and community services as this will have a multiplier effect on manufacturing activities and enhance economic growth in Nigeria.

Fiscal indicators for resource-rich and resource-poor low- and middle-income countries are compared using annual data from 1996 to 2012. Resource richness is defined by export composition: fuel greater than a 25 percent share and/or ores and metals greater than a 10 percent share. Fuel exporters have a significantly better general government fiscal balance than the rest of the sample, and higher revenues and expenditures, which are approximately evenly split between extra consumption expenditure and extra capital expenditure. Only about a quarter of their extra revenue goes into extra consumption expenditure, and this proportion has been lower since 2005. Fuel exporters' expenditure reacts with a lag to oil price fluctuations. There are no significant differences between ores and metals exporters and resource-poor countries, or between new and old resource exporters, in aggregate expenditures and revenues. Ores and metals exporters spend more on investment and less on government consumption. Some individual country cases are briefly discussed.

This study aims to find the direction of linkage between government expenditure (GE) and its revenue
(GR) applying econometrics in time-series techniques covering the annual data over the period of 1924
and 2011. The final result of this study exerts that there is unidirectional causality running from GE to
GR, and supports spending-led revenue hypothesis. In detail, ADF unit root test indicates that both timeseries
data are non-stationary at their levels, but become stationary series at their first differences. The
Johansen co-integration test shows that long-run equilibrium exists between GE and GR, and the effect is
statistically and economically significant. Granger causality test exhibits that there is a unidirectional
causality from government expenditure to government revenue.

With the greater integration of world economy foreign direct investment (FDI) has become a very common feature in almost every countries of the world. But, there is a trend of these FDI flows to be directed towards the developing nations because of emerging opportunities and huge market potentials. However, there are a lot of debates about the contribution of FDI in the developing economies. Therefore this study is intended to measure the macroeconomic impact of FDI in SAARC countries. This study has selected six macroeconomic variables: gross domestic product, inflation, current account balance, government revenue, total foreign exchange reserve and gross capital formation to test the impact of FDI on them. Required data have been collected from the websites of World Bank and International Monetary Fund for a period of 11 years from 2002 to 2012 and analyzed applying correlation and simple regression methods using SPSS 16.0. From the analysis this study has found that if FDI flows ...

Conflict within countries has often been associated with the presence of substantial natural resources, as different parties attempt to gain control of the revenues from these resources . The attempted secession of Biafra in Nigeria, the civil war in Angola, and the conflict in Sudan are all cases where resource revenues played an important part. Most such cases share common features in the immediate postconflict period: The country tends to have severely damaged physical infrastructure, poor economic performance, and a weak civil service. There is great need for public spending and for job creation. And developing natural resources appears to offer a base for economic recovery. This is especially true where the natural resource is oil, because the price includes considerable economic rent. Since many postconflict countries have low income levels and limited government revenues from other sources, the resource revenues can account for very large shares of GDP, government revenue, and exports. In Chad during the first full year of oil production, the petroleum sector accounted for about 30 percent of GDP and 60 percent of government revenue. Such a dominant resource sector offers enormous potential benefits for the country, but its special characteristics require careful management to obtain these benefits.

Infrastructure investment is a central part of the stimulus plans of the LAC region as it confronts the growing financial crisis. This paper estimates the potential effects on direct, indirect, and induced employment for different types of infrastructure projects with LAC-specific variables. The analysis finds that the direct and indirect short-term employment generation potential of infrastructure capital investment projects may be considerable-averaging around 40,000 annual jobs per US$1billion in LAC, depending upon such variables as the mix of subsectors in the investment program; the technologies deployed; local wages for skilled and unskilled labor; and the degrees of leakages to imported inputs. While these numbers do not account for substitution effect, they are built around an assumed "basket" of investments that crosses infrastructure sectors most of which are not employment-maximizing. Albeit limited in scope, rural road maintenance projects may employ 200,000 to 500,000 annualized direct jobs for every US$1billion spent. The paper also describes the potential risks to effective infrastructure investment in an environment of crisis including sorting and planning contradictions, delayed implementation and impact, affordability, and corruption.

6 A. Progress in Improving Health Outcomes have Been Mixed 6 B. Inequalities in the Utilization of Healthcare Services Persist 8 4. Health Financing: Composition and Trends 11 A. Health Expenditures Remain one of The Lowest in the Region 11 B. Resource Allocation is Oriented on Existing Network 12 C. Small Health Outlays are Inefficiently Allocated 14 D. Welfare Implications of the Health Financing Pattern 15 5. Health Financing and Organizational Reforms 17 A. Brief Overview of Recent Health Reforms 17 B. Creating Fiscal Space for Health 21 6. Conclusions 22 Annexes 23 References 28 Contents │ v Policy Note No. 2: Review of Public Expenditures on Health Preface This policy note is part of the World Bank's Programmatic Public Expenditure Review (PER) work program for FY2012-2013. It aims to provide the Government of Tajikistan with recommendations to strengthen budgetary processes and analysis. The work is led by Marina Bakanova (TTL, ECSP1), Ilyas Sarsenov (co-TTL, ECSP1) and Salman Zaidi (TTL in FY2012, SASEP). The work is being carried out in close collaboration with a counterpart Government of Tajikistan team led by the Ministry of Finance, which includes staff from the Ministries of Education and Health, the state-owned enterprise monitoring unit in the Ministry of Finance, and Barki Tajik. An initial consultation on the proposed scope of work was held with the Ministry of Finance in late 2011. This policy note was prepared by a Bank team led by Antonio Giuffrida (principal author, ECSH1) and comprised of Wezi Marianne Msisha (ECSH1) and Sarvinoz Barfieva (ECSH1). Takhmina Jumaeva, Tojinisso Khomidova, and Zakia Nekaien-Nowrouz provided support to the team. The peer reviewers were Chiara Bronchi (Lead Public Sector Specialist, AFTP5) and Ekaterina Vostroknutova (Senior Economist, LCSPE). Ajay Tandon (Senior Economist, EASHD) and Caryn Bredenkamp (Senior Economist, HDNHE) provided comments on the initial draft of this note. The team benefited from the guidance and advice of Ivailo V. Izvorski (Sector Manager, ECSP1), Francisco Galrao Carneiro (Lead Economist and Country Sector Coordinator, ECSP1), Marsha M. Olive (Country Manager, ECCTJ) and Daniel Dulitzky (Sector Manager, ECSH1). The team is grateful to the participants of the workshops organized in August and November 2012 in Dushanbe where early findings of the PER were presented for the comments and feedback. This policy note examines public expenditures on health in Tajikistan. After an introductory section, the note describes the institutional and administrative structure of the health sector. Section 3 presents health outcomes and health care utilization indicators. Section 4 describes health financing in Tajikistan and presents the main options to expand fiscal space for health. Section 5 reviews the health financing and organizational reforms implemented in Tajikistan. Section 6 concludes.

Fiscal decentralization provides the link between incentives for better performance of the local government and the elected support from the citizens and is, therefore, essential for an effective system of decentralization. The purpose of this note is to elucidate components of a welldesigned fiscal decentralized system and is aimed to assist task teams and stakeholders to evaluate fiscal decentralization effort in any given country. There are two main components of fiscal decentralization system: a) discretion of the local government to make decision on fiscal matters (including revenue assignment for local goods, revenue generation, transfer of funds through a well-designed transfer system, and utilization of funds) and b) accountability including mechanisms that hold local government officials to other elected and non-elected officials and social accountability that allows direct monitoring of the local government officials by the citizens.

Serie sobre sector público, buen gobierno, y responsabilidad y rendición de cuentas Transferencias fiscales intergubernamentales. Principios y prácticas Editado por Robin Boadway y Anwar Shah Transferencias fiscales intergubernamentales. Principios y prácticas iv The findings, interpretations, and conclusions expressed herein are those of the author(s) and do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this volume do not imply any judgment concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Los resultados, interpretaciones y conclusiones expresados aquí son los del(los) autor(es) y no reflejan necesariamente las opiniones de los directores del Banco Mundial, o de los gobiernos que ellos representan. El Banco Mundial no garantiza la exactitud de los datos incluidos en este trabajo. Las fronteras, los colores, los nombres y otra información expuesta en cualquier mapa de este volumen no denotan, por parte del Banco, juicio alguno sobre la condición jurídica de ninguno de los territorios, ni aprobación o aceptación de tales fronteras. This work was originally published by the World Bank in English as Intergovernmental Fiscal Transfers: Principles and Practice in 2006. This Spanish translation was arranged by Mayol Ediciones. Mayol Ediciones is responsible for the quality of the translation. In case of any discrepancies the original language will govern. Publicado originalmente en inglés por el Banco Mundial como Intergovernmental Fiscal Transfers: Principles and Practice en 2006. La traducción al castellano fue hecha por Mayol Ediciones, editorial que es responsable de su precisión. En caso de discrepancias, prima el idioma original.