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Tax collection efficiency in OECD countries improves via decentralization, simplification, digitalization and education

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  • Martínez, Yolanda Ubago
  • Arzoz, Pedro Pascual
  • Arregui, Idoia Zabaleta

Abstract

This paper offers an assessment of tax administration performance and provides evidence of the relationship between fiscal decentralization (and tax structure) and the technical efficiency of tax collection. The initial stage of the investigation consists of a data envelopment analysis (DEA) to obtain technical efficiency estimates for a sample of 28 OECD countries over the period 2004–2017. In a second stage, we explore how technical efficiency is affected by fiscal decentralization and tax structure variables. The results show how the degree of fiscal decentralization has a positive and significant impact on the technical efficiency of tax collection. They also reveal a relevant role of tax structure choices and the ratio of indirect to direct taxes, which can significantly affect tax collection efficiency. Finally, we extract some policy implications.

Suggested Citation

  • Martínez, Yolanda Ubago & Arzoz, Pedro Pascual & Arregui, Idoia Zabaleta, 2022. "Tax collection efficiency in OECD countries improves via decentralization, simplification, digitalization and education," Journal of Policy Modeling, Elsevier, vol. 44(2), pages 298-318.
    • Handle: RePEc:eee:jpolmo:v:44:y:2022:i:2:p:298-318
    DOI: 10.1016/j.jpolmod.2022.03.003
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    More about this item

    Keywords

    Efficiency; Tax collection; Decentralization;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration

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