SavedAdd your journal

Journals / Yönetim ve Ekonomi Dergisi / 2026 / Cilt: 30 Sayı: 4

Tax Capacity and Tax Effort in Turkiye and the European Union Countries: An Empirical Application

Türkiye ve Avrupa Birliği Ülkelerinde Vergi Kapasitesi ve Vergi Gayreti: Ampirik Bir Uygulama

Şeref Can Serin(HARRAN ÜNİVERSİTESİ, İKTİSADİ VE İDARİ BİLİMLER FAKÜLTESİ, MALİYE BÖLÜMÜ)0000-0001-8575-9128
Murat Demir(HARRAN ÜNİVERSİTESİ)0000-0002-1466-1104
Pages
817–840
Publication Date
2023-12-21
🏛️Bibliographic metadata and full text access for this article are provided via DergiPark.
DergiPark Record ↗
✨

AI Summary & Key Takeaways

AI Insight
⚡ TL;DR(Too Long; Didn't Read)

Key Words: Tax Capacity, Tax Effort, Tax Policy, Panel Data Analysis JEL Classification: H20, E62, 023

📌 3 Key Takeaways

🎯
Objective & Hypothesis:An efficient tax system is pivotal for effectively implementing fiscal policy and fostering economic development.
📊
Key Findings & Data:In this context, this research’s principal objective is to assess tax efforts spanning 1995 to 2021 for 27 European Union member states, 3 European Economic Area nations, and Turkiye.
💡
Conclusion & Impact:Key Words: Tax Capacity, Tax Effort, Tax Policy, Panel Data Analysis JEL Classification: H20, E62, 023
🔬Design:Araştırma Makalesi
📍Scope:2021 Verileri
⚙️Variables:Vergi Kapasitesi · Panel Veri Analizi · Vergi Çabası

Abstract

An efficient tax system is pivotal for effectively implementing fiscal policy and fostering economic development. The extent to which a tax system realizes its full potential determines its efficacy. Nevertheless, existing literature highlights that various economic, social, demographic, and institutional factors can impose limitations on realizing potential tax capacity, thereby constraining the level of tax effort. In this context, this research’s principal objective is to assess tax efforts spanning 1995 to 2021 for 27 European Union member states, 3 European Economic Area nations, and Turkiye. Within this framework, our regression analysis attempts to unveil the influence of critical factors affecting taxable capacity, including sectors with inherent tax challenges, international trade dynamics, the scope of the shadow economy, and the level of financial development. The findings of our study shed light on several noteworthy trends. Northern European countries exhibit a notably higher level of tax effort than the remaining sample countries and Turkiye, which lags behind the sample’s average tax effort level. Furthermore, the study postulates that enhancing financial development and curbing the shadow economy can contribute to the expansion of fiscal space by bolstering tax capacity. Key Words: Tax Capacity, Tax Effort, Tax Policy, Panel Data Analysis JEL Classification: H20, E62, 023

Özet

Etkin bir vergi sisteminin özellikle maliye politikasının uygulanabilirliği ve ekonomik kalkınma süreci açısından önemli olduğu düşünülmektedir. En basit anlamıyla, bir vergi sisteminin etkinliği, potansiyelinin ne kadarının gerçekleştirildiğiyle ilgilidir. Bununla birlikte, literatürde ekonomik, sosyal, demografik ve kurumsal faktörlerin potansiyel vergi kapasitesinin gerçekleştirilmesinde bazı kısıtlamalar yaratabileceği ve vergi gayreti düzeyini sınırlayabileceği tartışılmaktadır. Dolayısıyla, bu çalışmanın birincil amacı, 27 Avrupa Birliği, 3 Avrupa Ekonomik Bölgesi üyesi ve Türkiye için 1995-2021 döneminde vergi çabası düzeyini belirlemeye çalışmaktır. Bu bağlamda gerçekleştirilen regresyon tahmini, vergilendirmenin zor olduğu sektörler, uluslararası ticaret, kayıt dışı ekonomi ve finansal gelişme gibi vergileme kapasitesinin temel belirleyicilerinin etkilerini ortaya koymaya çalışmaktadır. Ampirik bulgular vergi gayreti açısından Kuzey Avrupa ülkelerinin örneklemin geri kalanından daha iyi bir performans gösterdiği, Türkiye’nin ise örneklem ortalamasının altında olduğuna işaret etmektedir. Ayrıca finansal gelişmenin iyileştirilmesi ve kayıt dışı ekonomi ile mücadelenin vergi kapasitesini artırarak mali alan oluşumuna katkı sağlayabileceği savunulmaktadır. Anahtar Kelimeler: Vergi Kapasitesi; Vergi Çabası, Vergi Politikası, Panel Veri Analizi JEL Sınıflandırması: H20, E62, 023

🔖

Cite This Article

Serin, Ş. C., Demir, M. (2023). Tax Capacity and Tax Effort in Turkiye and the European Union Countries: An Empirical Application. Yönetim ve Ekonomi Dergisi, Cilt: 30 Sayı: 4, 817–840. https://doi.org/10.18657/yonveek.1274445

📄 Full Text PDF Viewer

📄

PDF görüntüleyici hazırlanıyor...

References (65)

  1. Alfirman, L. (2003). Estimating stochastic frontier tax potential: can Indonesian local governments increase tax revenues under decentralization? (Working Paper 03-19). Retrieved from University of Colorado, Center for Economic Analysis Department of Economics website: https://www.colorado.edu/economics/sites/default/files/attached-files/wp03-19.pdf
  2. Amoh, J. K. (2019). An estimation of the taxable capacity, tax effort and tax burden of an emerging economy: evidence from Ghana. International Journal of Economics and Financial Issues, 9(3), 12-21. https://doi.org/10.32479/ijefi.7549
  3. Andoh, F. K. (2017). Taxable capacity and effort of Ghana’s value-added tax. African Review of Economics and Finance, 9(2), 255-284. https://www.ajol.info/index.php/aref/article/view/164555
  4. Atsan, E. (2017). The determinants of tax capacity and tax effort in Turkey for the period of 1984-2012. Ömer Halisdemir Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 10(4), 214-234. https://doi.org/10.25287/ohuiibf.339753
  5. Aydin, M. and Bozatli, O. (2022). Do transport taxes reduce air pollution in the top 10 countries with the highest transport tax revenues? A country-specific panel data analysis. Environmental Science and Pollution Research, 29(36), 54181-54192. https://doi.org/10.1007/s11356-022-19651-8
  6. Bahl, R. (1972). A representative tax system approach to measuring tax effort in developing countries. IMF Staff Papers, 1, 87-124. https://doi.org/10.2307/3866441
  7. Bahl, R. W. (1971). A regression approach to tax effort and tax ratio analysis. IMF Staff Papers,18(3), 570-612. https://doi.org/10.2307/3866315
  8. Baltagi, B. H., and Wu, P. X. (1999). Unequally spaced panel data regressıons wıth ar(1) dısturbances. Econometric Theory, 15(6), 814-823. https://doi.org/10.1017/s0266466699156020
  9. Bird, R. M., Martinez-Vazquez, J., & Torgler, B. (2008). Tax effort in developing countries and high income countries: the impact of corruption, voice and accountability. Economic Analysis and Policy, 38(1), 55-71. https://doi.org/10.1016/S0313-5926(08)50006-3
  10. Bird, R. M., Martinez-Vazquez, J., & Torgler, B. (2014). Societal institutions and tax effort in developing countries. Annals of Economics and Finance, 15(1), 301-351. http://ftp.aefweb.net/AefArticles/aef150107Bird.pdf
  11. Bozatlı, O. (2021). Dual income tax system and applicability in Turkey. Çukurova Üniversitesi Sosyal Bilimler Enstitüsü Dergisi, 30(1), 92-104. https://doi.org/10.35379/cusosbil.818358
  12. Brafu-Insaidoo, W. and Obeng, C. K. (2020). Estimating Ghana’s tax capacity and effort. (Working Paper, 338). Retrieved from African Economic Research Consortium, Research Department website: https://aercafrica.org/wp-content/uploads/2020/04/Research-paper-388.pdf
  13. Breusch, T. S. and Pagan, A. R. (1980). The lagrange multiplier test and its applications to model specification in econometrics. The Review of Economic Studies, 47(1), 239-253. https://doi.org/10.2307/2297111
  14. Brun, J.-F. and Diakite, M. (2016). Tax potential and tax effort: an empirical estimation for non-resource tax revenue and vat’s revenue (Working Paper, 10). Retrieved from CERDİ website: https://shs.hal.science/halshs-01332053/document
  15. Chelliah, R. J., Baas, H. J., & Kelly, M. R. (1975). Tax ratios and tax effort in developing countries, 1969-71, IMF Staff Papers, 22(1), 187-205. https://doi.org/10.2307/3866592
  16. Chigome, J. and Robinson, Z. (2021). Determinants of tax capacity and tax effort ın Southern Afrıca: an empirical analysis. Applied Economics, 53(60), 6927-6943. https://doi.org/10.1080/00036846.2021.1954593
  17. Cyan, M., Martinez-Vazquez, J., & Vulovic, V. (2013). Measuring tax effort: does the estimation approach matter and should effort be linked to expenditure goals? (Working Paper, 13-08). Retrieved from Georgia State University, International Center for Public Policy website: https://scholarworks.gsu.edu/icepp/39
  18. Dalamagas, B., Palaios, P., & Tantos, S. (2019). A new approach to measuring tax effort. Economies, 7(3), 77. https://doi.org/10.3390/economies7030077
  19. Dalton, H. (1954). Principles of public finance (23. bs). London: Routledge & Kegan Paul LTD.
  20. Davoodi, H. R. and Grigorian, D. A. (2007). Tax potential vs. tax effort: a cross-country analysis of Armenia’s stubbornly low tax collection (Working Paper, 07/106). Retrieved from International Monetary Fund website: https://doi.org/10.5089/9781451866704.001.A001
  21. Eltony, M. N. (2002). The determinants of tax effort in Arab countries (Working Paper, 207). Retrieved from International Monetary Fund, Arab Planning Institute website: https://www.scpd.gov.kw/archive/2019/workpapers/19.pdf
  22. Eurostat. (2023). Tax revenue statistics [Data Base]. Retrieved from: https://ec.europa.eu/eurostat
  23. Fenochietto, R. and Pessino, C. (2013). Understanding countries’ tax effort (Working Paper, 13-224) Retrieved from International Monetary Fund website: https://doi.org/10.5089/9781484301272.001
  24. Garg, S., Goyal, A., & Pal, R. (2017). Why tax effort falls short of tax capacity in Indian States: A stochastic frontier approach. Public Finance Review, 45(2), 232-259. https://doi.org/DOI:10.1177/1091142115623855
  25. Gujarati, D. N. and Porter, D. C. (2009). Basic econometrics (5. eds). New York: McGraw-Hill Irwin.
  26. Gupta, A.S. (2007). determinants of tax revenue efforts in developing countries (Working Paper, 08-184) Retrieved from International Monetary Fund website: https://doi.org/10.5089/9781451867480.001
  27. Hausman, J. A. (1978). Specification tests in econometrics. Econometrica, 46(6), 1251-1271. https://doi.org/10.2307/1913827
  28. Huang, J.-T., Lo, K.-T., & She, P.-W. (2012). The impact of fiscal decentralization on tax effort of China’s local governments after the tax sharing system. The Singapore Economic Review, 57(01), 1250005. https://doi.org/10.1142/S0217590812500051
  29. IMF. (2023). Financial development and financial inclusion [Data Base]. Retrieved from: https://www.imf.org/en/Data
  30. Kawadia, G. and Suryawanshi, A. K. (2023). Tax effort of the Indian States from 2001–2002 to 2016–2017: a stochastic frontier approach. Millennial Asia, 14(1), 85-101. https://doi.org/10.1177/09763996211027053
  31. Kızıltan, M. (2018). Analysis of local tax effort in Turkey with the new economic geography models approach (2007-2014) (Doctorate Thesis). Retrieved from: http://www.openaccess.hacettepe.edu.tr:8080/xmlui/handle/11655/5363?show=full
  32. Langford, B. and Ohlenburg, T. (2016). Tax revenue potential and effort an empirical investigation (Working Paper, S-43202-UGA-1). Retrieved form International Growth Centre website: https://www.theigc.org/sites/default/files/2016/01/Langford-Ohlenburg-2016-Working-paper.pdf
  33. Le, T. M., Moreno-Dodson, B., & Bayraktar, N. (2012). Tax capacity and tax effort: extended cross-country analysis from 1994 to 2009 (Working Paper, 6252). Retrieved form The World Bank website: https://doi.org/10.1596/1813-9450-6252
  34. Le, T. M., Moreno-Dodson, B., & Rojchaichaninthorn, J. (2008). Expanding taxable capacity and reaching revenue potential: cross-country analysis. Proceedings. Annual Conference on Taxation and Minutes of the Annual Meeting of the National Tax Association, 101, 384-397. https://doi.org/10.1596/1813-9450-4559
  35. Liesegang, C. and Runkel, M. (2018). Tax competition and fiscal equalization under corporate income taxation. International Tax and Public Finance, 25(2), 311-324. https://doi.org/10.1007/s10797-017-9451-6
  36. Lotz, J. R. and Morss, E. R. (1970). A theory of tax level determinants for developing countries. Economic Development and Cultural Change, 18(3), 328-341. https://doi.org/10.1086/450436
  37. Lotz, J. R. and Morss, E. R. (1967). Measuring “tax effort” in developing countries, IMF Staff Papers, 14(3), 478-499. https://doi.org/10.2307/3866266
  38. Mahdavi, S. and Westerlund, J. (2018). Subnational government tax revenue capacity and effort convergence: New evidence from sequential unit root tests. Economic Modelling, 73, 174-183. https://doi.org/10.1016/j.econmod.2018.03.016
  39. Martinez-Vazquez, J. and Boex, L. J. (1997). An analysis of alternative measures of fiscal capacity for regions of the Russian federation. (Working Paper, 97-4). Retrieved from Georgia State University, International Studies Program website: http://icepp.gsu.edu/files/2015/03/ispwp9704.pdf
  40. Medina, L. and Schneider, F. (2018). Shadow economies around the world: what did we learn over the last 20 years? (Working Paper 18/017). Retrieved from International Monetary Fund website: https://doi.org/10.5089/9781484338636.001
  41. Mertens, J. B. (2003). Measuring tax effort in Central and Eastern Europe. Public Finance and Management, 3(4), 530-564.
  42. Mikesell, J. (2007). Changing state fiscal capacity and tax effort in an era of devolving government, 1981–2003. Publius: The Journal of Federalism, 37(4), 532-550. https://doi.org/10.1093/publius/pjm016 Morrissey, O., Von Haldenwang, C., Von Schiller, A., Ivanyna, M., & Bordon, I. (2016). Tax revenue performance and vulnerability in developing countries. The Journal of Development Studies, 52(12), 1689-1703. https://doi.org/10.1080/00220388.2016.1153071
  43. Ndiaye, M. B. O. and Korsu, R. D. (2014). Tax effort in ECOWAS countries. in D. Seck (Ed.), Regional Economic Integration in West Africa (ss. 137-158). Cham: Springer International Publishing. https://doi.org/10.1007/978-3-319-01282-7_6
  44. Nerlich, C. and Heinrich Reuter, W. (2015). fiscal rules, fiscal space and procyclical fiscal policy (Working Paper, 1872). Retrieved from European Central Bank website: https://doi.org/10.2139/ssrn.3409786
  45. OECD. (2023). Tax revenue, [Data Base]. Retrieved from: https://doi.org/10.1787/d98b8cf5-en Parfenova, L., Pugachev, A., & Podviezko, A. (2016). Comparative analysis of tax capacity in regions of Russia. Technological and Economic Development of Economy, 22(6), 905-925. https://doi.org/10.3846/20294913.2016.1216019
  46. Pesaran, M. H. (2004). General diagnostic tests for cross section dependence in panels. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.572504
  47. Pessino, C. and Fenochietto, R. (2010). Determining countries’ tax effort. Revista de Economía Pública, 4(195), 65-87. Retrieved from: https://ssrn.com/abstract=2140805
  48. Piancastelli, M. (2001). Measuring the tax effort of developed and developing countries: cross country panel data analysis - 1985/95 (Working Paper, 818). Retrieved from Institute of Applied Economic Research website: http://dx.doi.org/10.2139/ssrn.283758
  49. Piancastelli, M. and Thirlwall, A. P. (2021). The determinants of tax revenue and tax effort in developed and developing countries: theory and new evidence 1996-2015. Nova Economia, 30, 871-892. https://doi.org/10.1590/0103-6351/5788
  50. Pratomo, A. W. (2020). The effect of foreign direct investment on tax revenue in developing countries. Jurnal BPPK: Badan Pendidikan Dan Pelatihan Keuangan, 13(1), 83-95. https://doi.org/10.48108/jurnalbppk.v13i1.484
  51. Purohit, M. C. (2006). Tax efforts and taxable capacity of central and state governments. Economic and Political Weekly, 41(8), 747-755. Retrieved from: https://www.jstor.org/stable/4417879
  52. Ricciuti, R., Savoia, A., & Sen, K. (2019). How do political institutions affect fiscal capacity? Explaining taxation in developing economies. Journal of Institutional Economics, 15(2), 351-380. https://doi.org/10.1017/S1744137418000097
  53. Rosen, H. S. and Gayer, T. (2010). Public finance (9. bs). Singapore: McGraw-HılL International Edition.
  54. Sağbaş, İ. (2001). An econometric analysis of local fiscal response to revenue sharing in Turkey. Environment and Planning C: Government and Policy, 19(1), 85-101. https://doi.org/10.1068/c9956
  55. Samimi, A. J., Zaroki, S., & Hadizade, A. (2009). Tax capacity and tax effort: evidence from Islamic Republic of Iran. World Applied Sciences Journal, 16(10), 1413-1422. Retrieved from: https://citeseerx.ist.psu.edu/document?repid=rep1&type=pdf&doi=a5c2a6f2d1ed91a5076f1ef723490c319515c8aa
  56. Schneider, H. M. F. (2022). New covid-related results for estimating the shadow economy in the global economy in 2021 and 2022. International Economics and Economic Policy, 19(2), 299-313. https://doi.org/10.1007/s10368-022-00537-6
  57. Stotsky, J. G. and WoldeMariam, A. (1997). Tax effort in Sub-Saharan Africa (Working Paper, 97/107). Retrieved from IMF African Department website: https://doi.org/10.5089/9781451852943.001
  58. Şen, H., Bulut-Çevik, Z. B., & Kaya, A. (2019). The Khaldun-Laffer curve revisited: a personal income tax-based analysis for Turkey. Transylvanian Review of Administrative Sciences, (57), 103-119. http://dx.doi.org/10.24193/tras.57E.7
  59. Tanzi, V. (1992). Structural factors and tax revenue in developing countries: a decade of evidence. in G. I & W. L. A. (Ed.), Open Economies: Structural Adjustment and Agriculture (pp. 267-281). Cambridge, Ma: Cambridge University Press.
  60. Truong, T. V. and Gash, D. N. (1979). Less-developed countries’ taxable capacity and economic integration: a cross-sectional analysis. The Review of Economics and Statistics, 61(2), 312-316. https://doi.org/10.2307/1924603
  61. Vallés Giménez, J. and Zárate Marco, A. I. (2017). Tax effort of local governments and its determinants: The Spanish case. Annals of Economics and Finance. Retrieved from: https://zaguan.unizar.es/record/76049
  62. World Bank. (2023). World development indicators [Data Base]. Retrieved from: https://databank.worldbank.org/
  63. Yilmaz, Y., Hoo, S., Nagowski, M., Rueben, K. S., & Tannenwald, R. (2006). measuring fiscal disparities across the U.S. states: a representative revenue system/representative expenditure system approach, fiscal year 2002 (Working Paper 06-2). Federal Reserve bank of Boston, New England Public Policy Center. Retrieved from: http://dx.doi.org/10.2139/ssrn.1957339
  64. Zárate-Marco, A. and Vallés-Giménez, J. (2019). Regional tax effort in Spain. Economics, 13(1), 20190031. https://doi.org/10.5018/economics-ejournal.ja.2019-31
  65. Pratomo, A. W. (2020). The effect of foreign direct investment on tax revenue in developing countries. Jurnal BPPK: Badan Pendidikan Dan Pelatihan Keuangan, 13(1), 83-95. https://doi.org/10.48108/jurnalbppk.v13i1.484