The digital transformation of tax administration has fundamentally changed the relationship between taxpayers and revenue authorities, creating new opportunities to improve tax compliance and reduce tax evasion. In recent years, the concept of Tax Administration 3.0 and the implementation of real-time reporting (RTR) systems have become central elements of fiscal modernization strategies worldwide. Despite growing empirical evidence on the effectiveness of digital tax administration tools, the literature lacks a unified theoretical framework explaining the mechanisms through which RTR influences taxpayer behavior and a comprehensive cross-country assessment of its fiscal effects. This study addresses these gaps by developing the Digital Tax Compliance Equilibrium (DTCE) framework and empirically testing its predictions using a balanced panel dataset of 38 OECD and EU member states covering the period 2014–2022. The proposed framework extends the classical Allingham–Sandmo model by incorporating endogenous RTR-based detection probability, compliance-cost reduction mechanisms, and social norm dynamics. To validate the theoretical propositions, the study employs Fixed Effects, System GMM, Difference-in-Differences, Instrumental Variables, and Probit estimations. The results consistently indicate that RTR adoption significantly improves voluntary tax compliance and reduces tax evasion. The causal Difference-in-Differences estimates show that RTR implementation increases the voluntary tax compliance rate by approximately 5.8 percentage points, while instrumental variable estimates confirm a reduction in the probability of above-median tax evasion. The findings further demonstrate that digital maturity and RTR are strategic complements, governance quality strengthens the effectiveness of digital enforcement tools, and high tax burdens partially attenuate compliance gains. The study contributes to the literature by providing a novel theoretical model of digital tax compliance and the first comprehensive cross-country empirical validation of Tax Administration 3.0 outcomes, offering important implications for the design of digital tax administration reforms.
This study examines the relationship between sectoral composition and tax revenue performance in Tanzania over the period 1990–2024. While economic growth is generally expected to enhance fiscal capacity, the extent to which different sectors contribute to tax revenue remains an open empirical question, particularly in developing economies characterized by structural transformation and widespread informality. This paper investigates how growth in agriculture, manufacturing, and services affects tax revenue using an Autoregressive Distributed Lag (ARDL) bounds testing approach. The analysis employs annual time-series data, with tax revenue measured as a percentage of GDP and sectoral outputs expressed as shares of GDP. Additional control variables include trade openness, per capita income, and household consumption. The ARDL model enables the estimation of both short-run and long-run relationships, while robustness is assessed using Fully Modified Ordinary Least Squares and Dynamic Ordinary Least Squares estimators. The results confirm the existence of a stable long-run relationship between sectoral composition and tax revenue. Services, trade openness, per capita income, and consumption exhibit positive and statistically significant long-run effects on tax revenue. In contrast, manufacturing and agriculture display negative long-run elasticities, suggesting that sectoral growth does not uniformly translate into fiscal gains. The negative effect of manufacturing highlights the role of tax incentives and exemptions in eroding the tax base, while the agricultural sector remains constrained by informality and limited tax handles. Short-run dynamics reveal temporary positive contributions from manufacturing and agriculture, indicating adjustment effects. The findings underscore the importance of sectoral structure in shaping fiscal outcomes and suggest that effective domestic revenue mobilization requires targeted reforms in tax policy, particularly regarding industrial incentives, agricultural taxation, and the expansion of value-added tax coverage in the services sector.
This paper compares the impact of the aggregate tax burden and tax composition on per capita growth across the EU, Portugal, and the New Member States. It also considers the possible heterogeneity of these effects by comparing Portugal (PT), the “New Member States” (NMS), and the remaining EU countries (EU-base), within the debate on the relationship between taxation and economic growth. The study is based on a panel data model for the 27 EU states, using annual values for the period 1995–2024. The empirical analysis is carried out using a country fixed effects estimator, with time dummies and country-clustered robust standard errors. Additional model extensions allow the assessment of heterogeneous effects across PT, NMS, and EU-base, both for the aggregate tax burden and for the main components of the tax structure. The main results point to a distortionary effect of the aggregate tax burden on economic growth in the EU. With regard to the tax structure, robust negative effects are reported for labour taxation at the EU level, with some extensions of the model extending these negative indications to capital and property taxation. The results also reveal a clear heterogeneous pattern in the economic effects of the Portuguese tax structure, where there is no evidence of harmful effects from labour and capital taxation, while property and consumption taxation display penalizing effects, relative to the EU-base and the NMS. These findings confirm the relevance of comparative fiscal analysis in the broader EU context and highlight the importance of country-specific tax structures.
Excise taxes on tobacco, alcohol, and other unhealthy products are widely regarded as important policy instruments for improving public health, yet their effectiveness may vary across regions with different consumption patterns and socioeconomic characteristics. This study examines the relationship between excise taxation and health outcomes in China, with particular attention to regional heterogeneity between northern and southern provinces and differences in urbanization levels. The analysis is based on a balanced panel dataset covering 31 Chinese provinces from 2015 to 2024. A two-way fixed effects model with province-clustered robust standard errors is employed to estimate the association between excise tax revenues and two health indicators: mortality rates and healthcare visits. The results show that higher excise tax revenues are associated with improved health outcomes. At the national level, a 1% increase in excise tax revenue corresponds to approximately 0.015–0.017% decline in mortality and a 0.014% reduction in healthcare visits. However, the magnitude of these effects remains relatively modest. Significant regional differences are identified. The health effect of excise taxation is statistically significant in northern provinces but insignificant in southern provinces. Interaction analysis confirms that excise taxes contribute more strongly to mortality reduction in the north. Additional evidence from urbanization-based subgroup analysis indicates that the largest effects occur in northern low-urbanization areas, where traditional unhealthy consumption habits are more deeply rooted and price sensitivity is higher. Vegetable consumption consistently demonstrates a protective association with health outcomes, while cigarette production is linked to poorer health indicators. The findings suggest that the effectiveness of excise taxation depends on regional consumption culture and local socioeconomic conditions. These results support the development of more differentiated and region-sensitive excise tax policies aimed at promoting healthier lifestyles and reducing health inequalities in China.
Tax reform in Indonesia under the Law Number 7 of 2021 on the Harmonization of Tax Regulations (HPP Law) has removed basic foodstuffs from the list of VAT-exempt goods, creating the potential for these items to be subject to VAT in the future. This study examines the equity and revenue implications of Value Added Tax (VAT) reforms on basic foodstuffs in Indonesia following the enactment of HPP Law. Employing the Almost Ideal Demand System (AIDS) estimated via Iterated Linear Least Squares (ILLS) and utilizing data from the 2019 National Socioeconomic Survey (SUSENAS), this research derives own-price elasticities to capture household behavioral responses to VAT-induced price changes under three policy scenarios: (i) the imposition of VAT on all basic foodstuffs, (ii) the imposition of VAT on selected basic foodstuffs, and (iii) subsidized VAT rates (1% and 3%). The analysis excludes own-source food production to obtain a more accurate measure of tax incidence. The findings reveal a clear trade-off between revenue and equity. A comprehensive VAT on all basic foodstuffs generates the highest revenue (approximately IDR 146 trillion) but is highly regressive. In contrast, a partial VAT scheme reduces regressivity, albeit with lower revenue potential (around IDR 67 trillion). Subsidized VAT rates perform poorly on both dimensions, yielding limited revenue (approximately IDR 14 trillion and IDR 41 trillion) while exacerbating inequality in the distribution of the tax burden. The results also show that ignoring behavioral responses leads to biased equity assessments, as expenditure patterns differ substantially between first-order and behavioral approaches. To expand the tax base in a pro-equity manner, the study recommends a selective partial VAT scheme that exempts commodities imposing a double burden, those with inelastic demand and a dominant expenditure share among low-income households.
