Determinants of Tax Revenues: Evidence From a Sample of Lower Middle Income Countries

Rachid Boukbech, Ahmed Bousselhami, Elhadj Ezzahid


Our goal in this paper is to explore the determinants of tax revenues in developing countries. After reviewing the main determinants discussed in economic literature, two models are estimated in a panel including 29 lower middle income countries over the period 2001-2014. The first concerns the tax capacity and the second the tax effort. The results show that per capita GDP and the value added of agriculture are significantly and positively correlated with tax revenues. The degree of openness has a positive but insignificant effect on tax revenues. The impact of population growth rate is negative but not significant. For the determinants of tax effort, the impacts of inflation and public spending are significant and positive. The relationship between the tax effort and the variables "public aid received" and "foreign debt" is significantly negative.

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Applied Economics and Finance    ISSN 2332-7294 (Print)   ISSN 2332-7308 (Online)

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