Abstract
In this paper, we examine the main determinants of tax revenues in Cote d’Ivoire, paying attention to institutional factors and the informal economy. To do this, we apply the autoregressive distributed lag model developed by Pesaran et al. (2001) on annual data covering the period 1984-2016. The results show that the low quality of institutions and the high share of the informal economy are among the factors explaining the low mobilization of tax revenues in Cote d’Ivoire. The results also reveal that GDP per capita, official development assistance, the share of services in GDP, the distribution of income within the population and the education level of the population positively affect tax revenues. On the other hand, trade openness negatively affects tax revenues. Based on these results, the paper provides several recommendations that can help improve tax revenues in Cote d’Ivoire.
Highlights
In a context of inclusive growth and the fight against poverty, one of the main challenges for the Ivorian government remains the mobilization of tax revenues
The objective of this paper is to identify the main determinants of the mobilization of tax revenue in Côte d’Ivoire
Where lPibh indicates the logarithm of GDP per capita; represents the quality of institutions; xm indicates the commercial opening; urb is the share of the urban population in the total population; is the logarithm of official development assistance; inf indicates the consumer price inflation rate; ecoinf is the informal economy as a percentage of GDP; agr is the share of agriculture in GDP; serv is the share of services in GDP; indice_Gini corresponds to the index of GINI; niv_edu is the education level of taxpayers and ε denotes the error term or stochastic perturbation
Summary
In a context of inclusive growth and the fight against poverty, one of the main challenges for the Ivorian government remains the mobilization of tax revenues. This is essential to initiate structuring projects and accelerate the fight against poverty as well as access to modern services which would make it possible to gain in productivity and efficiency. Côte d’Ivoire has distinguished itself in recent years by increasing the mobilization of its tax revenue following the reforms undertaken (Banque Mondiale, 2016). Despite the progress made following the fiscal and institutional reforms undertaken, the level of tax revenue mobilization in Côte d’Ivoire remains low (Keho, 2009; ACBF, 2014). If the understanding of these limits can guide governments regarding appropriate tax policy measures, knowledge of the factors determining tax revenue is important for a better mobilization of tax revenue
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