Bursian Dirk, Alfons Wierchenrieder and Jochen Zimmer, 2013, “Trust in Government and Fiscal Adjustment”, CESifo Working Paper series 4310, CESifo, Munich.
Cummings, Richard, Jorge Martinez-Vazquez, Michael McKee and Benno Torgler, 2009, “Tax Morale affects tax compliance: Evidence from surveys and an artefactual experiment”, Journal of Economic Behavior and Organization, vol. 70, issue 3, pages 447–457.
Drummond, Paulo, Wendell Daal, Nandini Srivastava and Luiz Edgard Oliveira, 2012 “Mobilizing Revenue in Sub-Saharan Africa: Empirical Norms and Key Determinants”, IMF Working Paper 12/108.
Gupta, Sanjeev and Samshuddin Tareq, 2008, “Mobilizing Revenue”, Finance and Development, September, available at: http://www.imf.org/external/pubs/ft/fandd/2008/09/gupta.htm
International Bureau for Fiscal Documentation (IBFD), 2013, database available at http://www.ibfd.org
International Monetary Fund, 2007, “Madagascar-Tax Policy Priorities to Improve Revenue Performance”, Selected Issues Paper CR07/239, (Washington: International Monetary Fund).
International Monetary Fund, 2011, “Revenue Mobilization in Developing Countries”, Policy Paper available at http://www.imf.org/external/pp/longres.aspx?id=4537
Torgler, Benno, 2007, Tax Compliance and Tax Morale: A theoretical and Empirical Analysis, Edward Elgar Publishing, United Kingdom.
Prepared by Priscilla Muthoora.
The characteristics controlled for were the share of agriculture in GDP, imports to GDP and real GDP per capita.
Recent IMF technical assistance suggests that meeting the revenue objective of the government will require improving customs revenue from about 5 percent of GDP currently to 7 percent of GDP in the medium term.
I would like to thank Jose Torres and Ricardo Fenochietto for sharing their data.
Defined as the ratio of revenue collected to the standard rate.
Torgler (2007) provides theoretical and empirical evidence for Latin America, Germany and Switzerland. Cummings and others (2009) use survey and experimental data for Botswana and South Africa to illustrate. Finally, Bursian, Wiechenrieder and Zimmer (2013) present evidence from the Eurobarometer survey showing that tax revenue tends to be lower in European countries with the least trust in government.
IMF (2007) noted that in the pre-political crisis period the size of the informal sector was estimated to be about 39 percent (Schneider, 2002), a high share but close to the average for low-income countries, and that as such it was unlikely to explain weak revenue performance. Anecdotal evidence and data on employment point to an increase in the size of the informal sector since, but this cannot alone explain the declining revenue yield.
In this regard, the recent steps to move towards greater and more systematic information exchange between the tax and customs directorates is a welcome first-step. The creation of a database on indicative import values at customs would be another improvement.
Per the provisions of the General Tax Code (GTC) of 1999, the royalty rate of 2 percent (1 percent for processed minerals) is split according to the following formula: 70 percent for local governments, 35 percent of the remaining 30 percent to the Bureau du Cadastre Minier de Madagascar (an autonomous agency) and the rest to the budget. The effective royalty rate for the budget is thus 0.4 percent for unprocessed minerals.