How much more can the tax administration collect? Measuring tax potential for Senegal

Diagne, Youssoupha Sakrya and Ba, Arona (2019): How much more can the tax administration collect? Measuring tax potential for Senegal. Published in: dpee.sn

Abstract

This paper measures tax potential in Senegal. The tax revenue structure shows a strong reliance on indirect taxes collected from foreign trade which is progressively declining thanks to trade liberalization reforms. A stochastic frontier model is used to compute the distance to potential for the main taxes. Results show that the overall tax revenue could be improved by 10.2 percentage points corresponding to a tax potential of 25.3% of GDP for Senegal. Furthermore, the income tax collection is the most distant from its potential and therefore its share in percentage of GDP can still be increased by 7.2 percentage point. However, the best performing tax is non-oil tariffs which only need a 0.2 percentage point increase to reach its potential

• Item Type: MPRA Paper
• Language: English
• Keywords: tax frontier, tax capacity, tax revenue, tax effort, stochastic tax frontier, inefficiency
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C51 - Model Construction and Estimation; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H21 - Efficiency ; Optimal Taxation

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