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Political Institutions, State Building, and Tax Capacity: Crossing the Tipping Point
Author:
Vitor Gaspar
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,
Laura Jaramillo
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, and
Mr. Philippe Wingender
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Series:
IMF Working Papers
Volume/Issue:
Volume 2016: Issue 233
Language:
English
Publication Date:
02 Dec 2016
DOI:
https://doi.org/10.5089/9781475558142.001
ISBN:
9781475558142
ISSN:
1018-5941
Pages:
33
Keywords:
WP; tax capacity; income tax; Lagos State government; real GDP; tax reform; tax threshold; income per capita; taxation; development; institutions; political economy; government activity; UDC government; State revenue staff; progressive tax; Subnational tax; Tax administration core functions; Tax return filing compliance; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund