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Abstract
The purpose of this paper is to examine the various structural determinants of revenue and tax effort in Tunisia. We used on the empirical study an ARDL model to estimate the dynamic equation of fiscal potential and its structural and non-structural determinants covering the period of 1996–2017 in Tunisia. The empirical results show that before 2010, Tunisia fully exploited its fiscal potential, and the tax effort was above unity. After 2010 this trend was reversed. Despite the increase in the tax burden, Tunisia is below potential. The results showed that Tunisia is facing dramatic difficulties in mobilizing more tax revenue with this same taxpayer base. As a result, it is called upon to orient reform actions towards two aspects: broadening the taxpayer base to guarantee more tax fairness and adopting an awareness and motivation strategy aimed at greater tax compliance. Tunisia should adopt reforms that aim to eliminate the flat-rate regime and put in place advantages and procedures to facilitate and motivate the transition from informal to formal. Finally, it would be wise to further regulate cash payments and ensure the application of the legal rules governing the matter. In order to optimize the allocation of budgetary resources and ease the pressure on public finances, it would be appropriate, even with a delay in relation to the legislation to fight tax evasion and fraud by improving the human and material resources made available to the tax administration and consolidating its digitalization efforts.
Highlights
IntroductionPublisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations
To estimate the tax effort amounts to estimating the theoretical tax potential to compare it to the actual tax revenue
After reviewing the results of the study, this econometric analysis shows that Tunisia is facing dramatic difficulties in mobilizing more tax revenue with this same taxpayer base
Summary
Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations. The authority or the government as manager of public finances plays a crucial role in the economic and social order of the country. Public finance allows the State to function by facing the various expenses such as: the defense of the territory, the security of citizens, education, health, infrastructure, administrative services, etc. With an essentially fiscal budget, the mobilization of fiscal resources is essential for the creation of sustained economic growth under the constraint of not compromising the economy’s capacity to create wealth within the meaning of the Laffer curve. According to Laffer (2004) “too much tax kills tax” (Laffer 2004)
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