Corruption, governance, and tax revenue: evidence from EAGLE countries

Abstract

This study addresses the influence of corruption and governance on the tax revenue collection in emerging and growth-leading economies (EAGLE). To serve the purpose, the study employed a panel dataset of 10 EAGLE nations from 2001 to 2015. After checking the data for unit root and cointegration, the study employs pooled mean group estimations to formulate empirical findings. The results suggested that corruption and governance has a positive and significant impact on the tax revenue collection of the emerging economies. The study emphasizes on enhancing the governance quality and reducing rate of corruption. To do so, the countries need to implement certain policy reforms such as an efficient and strict judicial system, introducing monetary benefits for the tax officers to reduce the opportunity of corruption, and more importantly to broaden the tax base instead of increasing the tax rates. By doing so, the tax administration will become better and hence the overall tax revenue collection of the economy will improve.