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Fiscal Reform and its Firm-Level Effects in Eastern Europe and Central Asia

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  • John E. Anderson

Abstract

This paper reports the first empirical evidence that fiscal reform efforts in transition countries have positive effects. Using the EBRD BEEPS I and II data, reported in 1999 and 2002, rigorous econometric models are estimated showing that the share of bribes paid to tax collectors is reduced in countries with more extensive fiscal reforms. This effect controls for selection bias in the likelihood that firms are required to make unofficial payments to tax authorities. On the basis of this evidence, we now have some confidence in the success of fiscal reform efforts. In addition, we have insight regarding what forms of fiscal reform may be more successful as the share of revenues generated from direct taxes (both personal and corporate) has an impact on tax bribes.

Suggested Citation

  • John E. Anderson, 2005. "Fiscal Reform and its Firm-Level Effects in Eastern Europe and Central Asia," William Davidson Institute Working Papers Series wp800, William Davidson Institute at the University of Michigan.
    • Handle: RePEc:wdi:papers:2005-800
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    References listed on IDEAS

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    1. Martinez-Vazquez, Jorge & McNab, Robert M., 2000. "The Tax Reform Experiment in Transitional Countries," National Tax Journal, National Tax Association;National Tax Journal, vol. 53(2), pages 273-298, June.
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    4. Martinez-Vazquez, Jorge & McNab, Robert M., 2000. "The Tax Reform Experiment in Transitional Countries," National Tax Journal, National Tax Association, vol. 53(n. 2), pages 273-98, June.
    5. Jorge Martinez-Vazquez & Robert McNab, 2000. "Tax Reform in The Tax Reform Experiment in Transitional Countries," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0001, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
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    Cited by:

    1. Christopher Gerry & Tomasz Mickiewicz, 2008. "Inequality, democracy and taxation: Lessons from the post-communist transition," Europe-Asia Studies, Taylor & Francis Journals, vol. 60(1), pages 89-111.
    2. Christopher Gerry & Tomasz Mickiewicz, 2006. "Inequality, Fiscal Capacity and the Political Regime: Lessons from the Post-Communist Transition," William Davidson Institute Working Papers Series wp831, William Davidson Institute at the University of Michigan.
    3. David Joulfaian, 2009. "Bribes and Business Tax Evasion," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 6(2), pages 227-244, December.

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    More about this item

    Keywords

    Fiscal reform; Bribery; Transition economies; Eastern Europe; Central Asia;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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