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Are ICT's boosting tax revenues? Evidence from developing countries

Author

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  • Jean-François Brun

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique)

  • Gérard Chambas

    (FERDI - Fondation pour les Etudes et Recherches sur le Développement International)

  • Jules Tapsoba
  • Abdoul-Akim Wandaogo

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper investigates the effect of ICT readiness and ICT usage on tax revenue mobilization in developing countries. The paper uses a panel fixed effect methodology on a sample of 96 developing countries from 2005 to 2016. We provide evidences that although ICT readiness affects positively tax revenue, the effect is not significant. However, overall ICT usage increase tax revenue. This positive and significant effect remains valid for various taxes: direct taxes and VAT notably. In addition, business, government and individual use of ICTs each have a greater effect on tax revenues than global ICT usage. Regarding the transmission channels, we find that the effect passes through the control of corruption, government effectiveness and tax compliance. Finally, taking into account the time dimension of the study, the positive effect is observed over the second half of the period under study rather than during the first.

Suggested Citation

  • Jean-François Brun & Gérard Chambas & Jules Tapsoba & Abdoul-Akim Wandaogo, 2020. "Are ICT's boosting tax revenues? Evidence from developing countries," CERDI Working papers hal-02979897, HAL.
    • Handle: RePEc:hal:cdiwps:hal-02979897
    Note: View the original document on HAL open archive server: https://uca.hal.science/hal-02979897
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    References listed on IDEAS

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    1. Sèna Kimm Gnangnon & Jean-François Brun, 2019. "Internet and the structure of public revenue: resource revenue versus non-resource revenue," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 8(1), pages 1-26, December.
    2. Timothy Besley & Torsten Persson, 2009. "The Origins of State Capacity: Property Rights, Taxation, and Politics," American Economic Review, American Economic Association, vol. 99(4), pages 1218-1244, September.
    3. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    4. Sèna Kimm Gnangnon & Jean‐François Brun, 2019. "Trade openness, tax reform and tax revenue in developing countries," The World Economy, Wiley Blackwell, vol. 42(12), pages 3515-3536, December.
    5. Bellon, Matthieu & Dabla-Norris, Era & Khalid, Salma & Lima, Frederico, 2022. "Digitalization to improve tax compliance: Evidence from VAT e-Invoicing in Peru," Journal of Public Economics, Elsevier, vol. 210(C).
    6. John C. Driscoll & Aart C. Kraay, 1998. "Consistent Covariance Matrix Estimation With Spatially Dependent Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 549-560, November.
    7. Gnangnon, Sèna Kimm & Brun, Jean-François, 2018. "Impact of bridging the Internet gap on public revenue mobilization," Information Economics and Policy, Elsevier, vol. 43(C), pages 23-33.
    8. Brückner, Markus, 2012. "An instrumental variables approach to estimating tax revenue elasticities: Evidence from Sub-Saharan Africa," Journal of Development Economics, Elsevier, vol. 98(2), pages 220-227.
    9. Merima Ali & Abdulaziz B. Shifa & Abebe Shimeles & Firew Woldeyes, 2021. "Building Fiscal Capacity in Developing Countries: Evidence on the Role of Information Technology," National Tax Journal, University of Chicago Press, vol. 74(3), pages 591-620.
    10. Mahdavi, Saeid, 2008. "The level and composition of tax revenue in developing countries: Evidence from unbalanced panel data," International Review of Economics & Finance, Elsevier, vol. 17(4), pages 607-617, October.
    11. Gnangnon, Sèna Kimm, 2020. "Internet and tax reform in developing countries," Information Economics and Policy, Elsevier, vol. 51(C).
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    Cited by:

    1. Bruno Emmanuel Ongo Nkoa & Jacques Simon Song, 2022. "Les canaux de transmission des effets des TIC sur la mobilisation des recettes fiscales en Afrique," African Development Review, African Development Bank, vol. 34(S1), pages 80-101, July.
    2. Pamela E. Ofori & Isaac K. Ofori & Simplice A. Asongu, 2022. "Towards efforts to enhance tax revenue mobilisation in Africa: Exploring the interaction between industrialisation and digital infrastructure," Working Papers of the African Governance and Development Institute. 22/045, African Governance and Development Institute..

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    Keywords

    ICTs; Tax revenues; Panel data; Developing countries;
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