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An alternative view of tax incidence analysis for developing countries

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  • Shah, Anwar
  • Whalley, John

Abstract

Despite decades of studies, tax incidence analyses for developing countries continue to be based on the same shifting assumptions used in developed country studies - despite obvious pitfalls. Taxes are assumed to be shifted forward to consumers or backward onto factor incomes. Developing countries typically have a much different nontax and regulatory policy than developed countries with such features as more protection, rationed foreign exchange, price controls, black markets, and credit rationing. The authors argue that these features can greatly complicate the incidence effects of taxes in developing countries. They also discuss the implications of their findings for country lending programs and comment on how the extent to which nontax policy reform has already been implemented affects the significance of the points raised in this paper.

Suggested Citation

  • Shah, Anwar & Whalley, John, 1990. "An alternative view of tax incidence analysis for developing countries," Policy Research Working Paper Series 462, The World Bank.
    • Handle: RePEc:wbk:wbrwps:462
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    Cited by:

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    2. Chu, Ke-young & Davoodi, Hamid & Gupta, Sanjeev, 2003. "Income distribution and tax, and government social spending policies in developing countries," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34918, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    3. Richard M. Bird, 2008. "Tax Challenges Facing Developing Countries," Working Papers id:1618, eSocialSciences.
    4. Vanessa Boshoff, 1993. "Corporate Tax Rates and Inter‐country Comparisons," South African Journal of Economics, Economic Society of South Africa, vol. 61(4), pages 320-329, December.
    5. Mr. Michael Sarel, 1997. "How Macroeconomic Factors Affect Income Distribution: The Cross-Country Evidence," IMF Working Papers 1997/152, International Monetary Fund.
    6. World Bank, 2000. "Thailand : Public Finance Review," World Bank Publications - Reports 14508, The World Bank Group.
    7. Frances Stewart, 2003. "Income distribution and development," Chapters, in: John Toye (ed.), Trade and Development, chapter 10, Edward Elgar Publishing.
    8. Levine, Ross & Renelt, David, 1991. "Cross-country studies of growth and policy : methodological, conceptual, and statistical problems," Policy Research Working Paper Series 608, The World Bank.
    9. Cesar Revoredo-Giha & Luiza Toma & Faical Akaichi, 2020. "An Analysis of the Tax Incidence of VAT to Milk in Malawi," Sustainability, MDPI, vol. 12(19), pages 1-17, September.
    10. Richard M. Bird, 2008. "The BBLR Approach to tax Reform in Emerging Countries," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0804, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    11. Renelt, David, 1991. "Economic growth : a review of the theoretical and empirical literature," Policy Research Working Paper Series 678, The World Bank.

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