Document Type
Working Paper
Publication Date
2014
Abstract
The determinants of corruption have long been an important subject for research in the elds of economics and political science. The literature has identi ed a wide range of factors that cause corruption; however, little research has been done on how the design of government policy in uences corruption. We advance a new factor, the tax structure being measured as both tax mix and tax complexity, as another potential cause of corruption, and present strong supporting evidence by using a large sample of countries over the period 1995-2009. Our ndings indicate that: (1) countries relying more heavily on direct taxes tend to enjoy a lower level of corruption, as opposed to countries with higher reliance on indirect taxes; and (2) countries with more complex tax systems tend to have a higher level of corruption, as opposed to countries with less complex tax systems. These results are robust across alternative measures of corruption and tax structure, and alternative estimations with and without correcting the potential endogeneity issue of the tax structure variables.
Recommended Citation
Liu, Yongzheng and Feng, Haibo, "Tax Structure and Corruption: Cross-Country Evidence" (2014). ICEPP Working Papers. 5.
https://scholarworks.gsu.edu/icepp/5
Comments
International Center for Public Policy Working Paper Series #1427, Andrew Young School of Policy Studies, Georgia State University.