Tax Effort of the Indian States from 2001–2002 to 2016–2017

A Stochastic Frontier Approach

Bibliographic Data

ID13083029
AuthorsGanesh Kawadia (0000-0001-6373-021X, Devi Ahilya Vishwavidyalaya), Ankit Kumar Suryawanshi (0000-0002-1368-3969, Government College, Chhatrasal Bundelkhand University, Naryawali, Sagar, Maharaja Chhatarpur, Madhya Pradesh, India, corresponding author)
Year2021
Volume14
Issue1
Pages85-101
Publication date2021-07-27
Open AccessYes
TypeARTICLE
VenueMillennial Asia (JOURNAL)
Journal identifiersISSN: 2321-7081 • E-ISSN: 0976-3996
PublisherSAGE Publishing (PUBLISHER • US)
DOI10.1177/09763996211027053
OpenAlexW3184050448
LanguageEN
Citations received2
References cited24

This article estimates the tax capacity and tax effort of 17 major states of India from 2001–2002 to 2016–2017 using the stochastic frontier panel data model. It is found that per capita income, agriculture activity, infrastructure, labour force and bank credit are the significant determinants of tax capacity, while social sector spending and central transfer to states are significant in determining tax effort. The Goods and Services Tax has reduced the states’ tax powers. Therefore, the states are highly dependent on their limited legislative taxes for revenue mobilization. However, there is little scope for the subnational governments to increase tax revenue as all states have achieved at least 90% of their tax potential

Ad valorem tax · Direct tax · Econometrics · Economic policy · Economics · Frontier · Indirect tax · International economics · Monetary economics · Panel data · Public economics · Revenue · State income tax · Tax reform · Tax revenue · Value-added tax · Fiscal Policy and Economic Growth · Local Government Finance and Decentralization · Taxation and Compliance Studies · Finance

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