The political economy of revenue pressure and tax collection efficiency

Abstract

Purpose

The purpose of this paper is to develop a political‐economy model to show how political imperatives lead to reforms in administering direct tax collection.

Design/methodology/approach

A static, political‐gain approach was used to model employment in the tax collection sector and then the implications of an increase in revenue pressure were derived through a comparative statics method.

Findings

As revenue pressure increases, the “political value” in terms of granting employment falls and thus efficiency resulting from purely political motives decreases.

Originality/value

This paper is an original work.

Citation

Das, S.P. (2011), "The political economy of revenue pressure and tax collection efficiency", Indian Growth and Development Review, Vol. 4 No. 1, pp. 38-52. https://doi.org/10.1108/17538251111124990