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Does Aid Hinder Tax Efforts? More Evidence

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  • José Antonio Alonso
  • Carlos Garcimartín

Abstract

During recent years, new doubts about the effectiveness of international aid have emerged. One of the arguments employed to justify this sceptical view is that aid can hinder tax effort in developing countries. Nevertheless, empirical research on the aid-tax nexus is inconclusive and it shows some shortcomings in the tax database employed and in the variables considered in the estimation. The main goal of this article is to overcome these shortcomings. The main results are twofold: i) income distribution is a crucial determinant of tax revenues; and ii) once income distribution is taken into account, aid shows no significant impact on tax revenue; not even when we control for institutional quality.

Suggested Citation

  • José Antonio Alonso & Carlos Garcimartín, 2011. "Does Aid Hinder Tax Efforts? More Evidence," Discussion Papers 11/04, University of Nottingham, CREDIT.
    • Handle: RePEc:not:notcre:11/04
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    2. Musharraf Cyan & Jorge Martinez-Vazquez & VIoleta Vulovic, 2013. "Measuring tax effort: Does the estimation approach matter and should effort be linked to expenditure goals?," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1308, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
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    4. Sèna Kimm Gnangnon, 2022. "Does Poverty Matter for Tax Revenue Performance in Developing Countries?," South Asian Journal of Macroeconomics and Public Finance, , vol. 11(1), pages 7-38, June.
    5. Djedje Hermann Yohou & Michaël Goujon & Bertrand Laporte & Samuel Guérineau, 2016. "Is Aid Unfriendly to Tax? African Evidence of Heterogeneous Direct and Indirect Effects," Working Papers halshs-01321620, HAL.
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    8. Ибрагимова Найля Мурадовна, 2015. "Эмпирическая Оценка Эффективности Ндфл И Ндс В Узбекистане," Higher School of Economics Economic Journal Экономический журнал Высшей школы экономики, CyberLeninka;Федеральное государственное автономное образовательное учреждение высшего образования «Национальный исследовательский университет «Высшая школа экономики», vol. 19(1), pages 81-103.

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