# **Table 1 – Determinants of Tax Revenues and Taxable Capacity**

Panel A: Population growth used as proxy for demographic characteristic

|**Dependent Variable: Tax**|**Revenue i**|**n % of GDP**||||||||
|---|---|---|---|---|---|---|---|---|---|
||(1)|(2)|(3)|(4)|(5)|(6)|(7)|(8)|(9)|
|||**1994-200**|**9**||**1994-200**|**1**||**2002-20**|**09**|
|Constant|22.891<br>(26.96)*|14.423<br>**(13.235)|11.133<br>**(9.218)***|21.581<br>(16.48)*|12.894<br>**(7.306)*|9.289<br>**(5.061)***|23.807<br>(21.051)|12.43<br>**(8.054)*|11.935<br>**(7.059)***|
|GDP per capita (constant )|1.11|0.503|0.002|1.23|0.635|-0.238|0.993|-0.113|0.199|
||(5.126)*|**(2.103)*|* (0.008)|(3.112)*|**(1.614)*|(-0.557)|(3.716)*|**(-0.341)|(0.627)|
|Population Growth|-0.883<br>(-4.283)|-0.672<br>** (-3.044)*|-0.854<br>* (-3.896)***|-0.362<br>(-1.26)|0.375<br>(1.191)|0.029<br>(0.092)|-0.961<br>(-2.967)*|-1.053<br>* (-3.168)|-1.289<br>** (-3.796)***|
|Trade openness<br>(% of GDP)|0.036<br>(8.099)*|0.024<br>**(5.242)*|0.025<br>**(5.609)***|0.029<br>(4.056)*|0.011<br>**(1.562)|0.015<br>(2.084)**|0.04<br>(6.979)*|0.029<br>**(5.182)*|0.028<br>**(4.97)***|
|Agriculture value added<br>(% of GDP)|-0.243<br>(-11855|-0.154<br>)* (-713)**|-0.067<br>* (-2794)***|-0.233<br>(-8477)|-0.162<br>** (-5818)|-0.089<br>** (-2896)***|-0.276<br>(-7962)*|-0.133<br>* (-3577)|-0.029<br>** (-0685)|
|<br>CORRUPTION INDEX|.|.<br>-0.824<br>(-6.739)*|.<br>**|.|.<br>-0.666<br>(-3.559)|.<br>***|.|.<br>-1.385<br>(-7.091)|.<br>***|
|BUREAUCRACY INDEX|||-1.273<br>(-9.056)***|||-1.275<br>(-5.906)***|||-1.252<br>(-6.34)***|
|OBS<br>Adtd R2|1322<br>058|1125<br>065|1125<br>066|589<br>648|483<br>069|483<br>070|733<br>058|642<br>064|642<br>064|
|Panel<br>juse<br>**Dependent Variable: Tax**|B: Age<br>.<br>**Revenue i**<br>|depend<br>.<br>**n % of GD**<br>|encyused<br>.<br>**P**<br>|asproxy <br>.<br>|for dem<br>.<br>|ographic c<br>.<br>|haracteri<br>.<br>|stic<br>.<br>|.<br>|
||(1)|(2)|(3)|(4)|(5)|(6)|(7)|(8)|(9)|
|||**1994-200**|**9**||**1994-200**|**1**||**2002-20**|**09**|
|Constant|24.483|18.864|15.314|21.724|14.233|10.005|25.628|17.145|16.766|
||(16.979)*|*(12.486)*|*(9.41)***|(9.467)**|*(5.546)**|*(3.816)***|(12.414)*|*(7.943)*|**(7.3)***|
|GDP per capita (constant )|1.01<br>(4.665)**|0.422<br>*(1.78)*|0.004<br>(0.016)|1.19<br>(2.997)**|0.63<br>*(1.596)|-0.251<br>(-0.588)|0.843<br>(3.224)**|-0.223<br>*(-0.681)|0.154<br>(0.483)|
|Age dependency ratio|-0.045<br>(-2.438)*|-0.089<br>* (-4.892)*|-0.08<br>* (-4.503)***|-0.011<br>(-0.396)|-0.009<br>(-0.343)|-0.01<br>(-0.363)|-0.046<br>(-1.642)*|-0.096<br> (-3.68)*|-0.091<br>** (-3.461)***|
|Trade openness|0.033|0.021|0.021|0.027|0.014|0.015|0.036|0.026|0.024|
|(% of GDP)|(7.445)**|*(4.794)**|*(4.92)***|(3.871)**|*(1.972)**|(2.214)**|(6.49)***|(4.75)**|* (4.391)***|
|Agriculture value added|-0.235|-0.113|-0.04|-0.231|-0.152|-0.083|-0.29|-0.118|-0.038|
|(% of GDP)|(-10.038)|* (-4.712)*|* (-1.557)|(-7.316)*|* (-4.827)*|* (-2.482)**|(-7.885)*|* (-3.122)|** (-0.886)|
|CORRUPTION INDEX||-0.882|||-0.675|||-1.41||
|||(-7.209)*|**||(-3.607)*|**||(-7.227)|***|
|BUREAUCRACY INDEX|||-1232|||-128|||-1171|
||||.<br>(-8.868)***|||.<br>(-6.064)***|||.<br>(-5.994)***|
|OBS|1322|1125|1125|589|483|483|733|642|642|
|Adjusted R2|0.58|0.65|0.66|6.49|0.68|0.70|0.58|0.65|0.64|

Note: The estimation technique is panel OLS with regional and time dummies. t-statistics are reported in parenthesis. The estimated coefficients of GDP per capita are multiplied by 10,000. The dependent variable is the share of tax revenue in percentage of GDP. GDP per capita is in constant 2000 US$; population growth is the growth rate of population between 15 and 64 ages; trade openness is the sum of imports and exports in percentage of GDP; corruption index is recalculated such that lower values indicate lower corruption; bureaucracy index is recalculated such that lower values indicate higher bureaucracy quality. We also include both regional and time dummies. The regions are defined in Table A4. The time dummies are annual.

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