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This article describes and explains a previously overlooked empirical pattern in state revenue collection. As late as 1913, central governments in the West collected similar levels of per capita revenue as the rest of the world, despite ruling richer societies and experiencing a long history of fiscal innovation. Western revenue levels permanently diverged only in the following half-century. We identify the twentieth-century great revenue divergence by constructing a new panel data set of central government revenue with broad spatial and temporal coverage. To explain the pattern, we argue that sustainably high levels of revenue extraction require societal demand for an activist state, and a supply of effective bureaucratic institutions. Neither factor in isolation is sufficient. We formalize this insight in a game-theoretic model. The government can choose among low-effort, legibility-intensive, and crony-favoring strategies for raising revenues. Empirically, our theory accounts for low revenue intake in periods of low demand (the nineteenth-century West) or low bureaucratic capacity (twentieth-century former colonies), and for eventual revenue spikes in the West.

This paper presents an analytical overview of the effects of inflation on government revenues, expenditure and fiscal positions. Evidence for a range of countries from the current inflation episode and that of the 1980s is compared and contrasted. The key finding is that high inflation initially boosts tax revenues and improves fiscal positions, but expenditure quickly catches up and offsets this improvement. The short-term boost is partly due to structural changes that have made modern tax systems more elastic with respect to inflation. The medium-turn deterioration reflects a shifttoward spending items more responsive to inflation. The key risk is that the impression of abundant tax revenues will lead to spending programmes or tax cuts that damage public finances in the long term. As research on inflation and public finances has been dormant since the 1980s, this analysis fills a gap in our understanding of the fiscal consequences of inflation.

Oil and gas production is a major source of public revenue in many US regions, but uncertainty exists over the future of demand for hydrocarbons. We model how oil and gas production and related government revenue change in five western US basins depending on future oil and natural gas prices under three scenarios of climate policy ambition. We find that the Green River and San Juan basins experience production declines across all scenarios, while production in the Bakken, Permian, and Powder River basins are more dependent on prices. Government revenue generally follows the direction of production, but these relationships are not directly proportional. Under the lower price scenarios, revenue declines more steeply than production because it reflects both production and prices, which both decline. Long-term permanent funds, which are in place across all the states we examine, provide an important fiscal cushion for school districts, their primary beneficiary. JEL Classification: H71, H72, H73, O13, Q41, Q48

Informal cross-border fish trade (ICBFT) is becoming predominant in many African nations and unfortunately there is little information on its magnitude at country level. To address this gap, this study was conducted in mainland Tanzania covering two border posts and one fishing village, to identify the nature, conditions and assess the weight and value of ICBFT in comparison to the available official data, so as to determine the Government revenue loss for the marine small pelagic fishery which is locally known as dagaa. Data was collected through participants observation, interviews and informal routes monitoring framework. Interview excerpt coding, social network analysis and quantification were used in data analysis. Findings revealed that the marine dagaa informal cross-border trade is being operated in a multifaceted setting, characterized by five aspects: network; key actors; social supports; informal cross-border trade routes; and informal transiting places, time and vehicles. Middlemen and Porters scored higher network centrality scores, implying that, they are the key actors in the ICBFT operation. Further, it was found that the marine dagaa ICBFT accounted for about 972.6 M. tons valued at US$1.8 million, which is 7.5 higher compared to official data between 2018 and 2019, resulting in approximately US$165,006 government revenue loss. Such findings are essential for assessing the total contribution of cross-border fish trade to the country's economy, and setting appropriate ICBFT management strategies to maximize benefits from the cross-border trade in the country for people’s well-being and the neighbouring countries.

This study uses data from 1986 to 2021 and the auto-regressive distributed lag model to explore India’s fiscal policy determinants of government health spending. The results find two structural breaks in time: (i) 2002 for state government health spending (SGHS) and (ii) 2014 for central government health spending. The results also show that central revenue transfers to states have a positive and statistically significant effect on SGHS in the long run. The results imply that a 1% rise in central revenue transfers to states leads to a 0.399% increase in SGHS. Further, state government public debt exhibits a negative and statistically significant relationship with SGHS, implying that a 1% rise in public debt leads to a 0.119% fall in SGHS in the long run. Fiscal management (i.e., revenue mobilization and debt sustainability) is essential to prepare a long-term strategy for health-care financing.

Are budget deficits eliminated by tax increases or by spending cuts? This paper provides a new perspective on this issue by analyzing fiscal plan data, as they are closely related to budget decisions of the legislative branch and are less correlated with macroeconomic developments during the fiscal year. We examine a novel historical dataset on Switzerland from 1850 to 2018 using (nonlinear) cointegration tests and error correction models. First, our historical analysis indicates that realized budget adjustments usually occurred through revenues and that fiscal plans are specifically crucial for short-term budget dynamics. Second, a recursive estimation approach shows that the adjustment relationships vary over time. In addition, our dynamic analysis provides evidence that budgetary imbalances are addressed by adjusting expenditures in plans in the last decades in contrast to realized adjustments, which benefited from underestimated revenues. However, initial indications suggest that the debt containment rule counteracts this asymmetry. Finally, from a policy perspective, our results stress the importance of fiscal plans in budget adjustment processes and the design properties of fiscal rules.

Background The transition towards a sustainable energy system is reshaping the demand for final energy, driven by the diffusion of new end-use technologies. This shift not only impacts consumers’ energy expenses, but also holds implications for the public budget. Building on data from a German energy transition scenario, we analyse the direct impact of energy costs on industries, low-income households, and changes in government revenues from the taxes and levies on final energy carriers. Our analysis considers the impact of current policies and explores a scenario introducing additional excise tax rates to offset potential revenue losses. Results We found that substantial carbon price increases could generate revenues that offset the losses from excise taxes on fossil fuels while enabling the financing of renewable support from the public budget by the end of this decade. Nevertheless, a decline in government revenues from taxes and levies is anticipated after 2030 until the middle of the century due to the declining use of fossil fuels. Maintaining current excise tax revenues during the transition could be achieved by introducing additional excise taxes on fossil fuels and electricity. Lastly, our analysis indicated a continuous decline in household energy expenditures until 2050, whereas energy-intensive industries face adverse impacts due to decarbonisation. Conclusions This research provides valuable insights into the fiscal implications of the energy transition, shedding light on different industrial sectors and households while considering the evolving impact on the public budget. Policymakers may need to consider systemic reforms or alternative financing mechanisms outside the energy system to balance the books. Highlights Micro-simulations analysing the impact of taxes and levies on final energy Decreasing fossil final energy demand leads to substantial losses of government revenues Energy-intensive industries are adversely affected by decarbonisation Household energy costs are expected to decline

In a global context characterized by budgetary pressures, aging populations, and accelerated economic transitions, the capacity of countries to mobilize stable and sustainable tax revenues represents a crucial pillar for maintaining macroeconomic stability and social cohesion. This research investigated the determinants of total tax revenues in the developed economies of the G7 group (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States) during the period 2000–2022, employing both static and dynamic panel econometric approaches. The estimated model considered total tax revenues as the dependent variable, while the explanatory variables encompassed the main categories of government revenues: direct taxes (personal and corporate income), indirect taxes (consumption, trade, and other taxes), social contributions, grants, other non-tax revenues, and institutional quality indicators (regulatory quality and control of corruption). The empirical findings revealed that all tax components analyzed exert a positive and significant influence on total tax revenues, with particularly strong effects observed for consumption taxes, social contributions, and personal income taxes. Based on these results, the study provides policy recommendations aimed at diversifying revenue sources, balancing direct and indirect taxation, and broadening the tax base equitably. The study advances the literature on international taxation by offering an integrated and comparative analysis of the revenue structures in advanced economies, while also identifying relevant pathways for sustainable tax reforms in a dynamic global environment.

This is a study of the effect of illicit financial flows on government revenues in the West African Economic and Monetary Union countries. The study uses data from 8 countries and covering the 1996-2013 period. Using an empirical investigation with instrumental variables, the study found that illicit financial flows had a negative and significant effect on government revenues and that this effect was tied to per capita income, corruption and governance. It further highlighted the significance of the per capita income in the relationship between illicit financial flows and government revenues. The study therefore recommends that the governments should strengthen their tax collection capacity to better identify and prevent certain illegal activities associated with illicit financial flows. At the regional level, the West African Economic and Monetary Union Commission should consider setting up an appropriate illicit financial flows consultative body that would bring together state and non-state actors and serve as a platform for consultation and discussing illicit financial flows issues. With regard to the per capita income as the main transmission channel, governments should put in place the incentives that people need to keep and invest a large part of their profits and savings in their countries origin.

This paper investigates the relationship between government expenditure, government revenue and public debt in Namibia by employing the data of these variables for the period 1980 to 2018. An error correction model (ECM) was employed to analyse the short- run dynamics and a positive relationship between government expenditure and government revenue was found. Similarly, there is supporting evidence that an increase in public debt will stimulate government expenditure. The error correction term indicates that any disequilibrium is corrected at an annual speed of 46.4 percent. Additionally, the pair-wise Granger causality test fails to support the spend-revenue hypothesis. However, there is supporting evidence that the tax-spend hypothesis does hold for Namibia. The study recommends that policy-makers should thoroughly review government expenditure and bring it to optimal levels in order to prevent the widening of public debt.