Estimating Relative Tax Efficiency for Selected States in India: An Error Correction Approach

IF 1.3 Q1 AREA STUDIES Millennial Asia Pub Date : 2023-06-26 DOI:10.1177/09763996231157048

D. K. Srivastava, M. Bharadwaj, T. Kapur, R. Trehan

引用次数: 0

Abstract

We estimate state-level tax efficiency in India using an error correction framework, making a distinction between a long-term cointegrating relationship and a short-term dynamics around it. We use a stochastic frontier approach in a panel data framework considering 17 medium and large (ML) states for the period 2004–2005 to 2019–2020. We find that the FC14’s initiative to sharply increase the states’ share in the divisible pool of central taxes had an adverse impact on states’ own tax revenues. The short-term relationship converges to the long-term relationship in 2.6 years. In terms of relative tax effort, the most efficient state was Tamil Nadu, while the least efficient was Bihar. Results from this study would be useful in averting the problem of adverse incentives, while determining the intergovernmental transfers. In the post-GST scenario, operating at their tax efficiency frontier would be critical for states especially in the light of discontinuation of the GST compensation cess.

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估计印度选定邦的相对税收效率:一种误差修正方法

我们使用纠错框架估计了印度的州级税收效率，区分了长期协整关系和围绕它的短期动态。我们在面板数据框架中使用了随机前沿方法，考虑了2004-2005年至2019-2020年期间的17个中型和大型（ML）州。我们发现，FC14大幅增加各州在中央税可分割池中的份额的举措对各州自身的税收产生了不利影响。短期关系在2.6年后收敛为长期关系。就相对税收努力而言，效率最高的州是泰米尔纳德邦，而效率最低的州是比哈尔邦。这项研究的结果将有助于避免不利激励的问题，同时确定政府间转移。在商品及服务税后的情况下，在其税收效率边界运营对各州来说至关重要，尤其是在商品及消费税补偿税终止的情况下。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Millennial Asia AREA STUDIES-

CiteScore

4.50

自引率

12.50%

发文量

期刊介绍： Millennial Asia: An International Journal of Asian Studies is a multidisciplinary, refereed biannual journal of the Association of Asia Scholars (AAS)–an association of the alumni of the Asian Scholarship Foundation (ASF). It aims to encourage multifaceted, multidisciplinary and interdisciplinary research on Asia, in order to understand its fast changing context as a growth pole of global economy. By providing a forum for Asian scholars situated globally, it promotes dialogue between the global academic community, civil society and policy makers on Asian issues. The journal examines Asia on a regional and comparative basis, emphasizing patterns and tendencies that go beyond national borders and are globally relevant. Modern and contemporary Asia has witnessed dynamic transformations in cultures, societies, economies and political institutions, among others. It confronts issues of collective identity formation, ecological crisis, rapid economic change and resurgence of religion and communal identifies while embracing globalization. An analysis of past experiences can help produce a deeper understanding of contemporary change. In particular, the journal is interested in locating contemporary changes within a historical perspective, through the use of interdisciplinary and multidisciplinary approaches. This way, it hopes to promote comparative studies involving Asia’s various regions. The journal brings out both thematic and general issues and the thrust areas are: Asian integration, Asian economies, sociology, culture, politics, governance, security, development issues, arts and literature and any other such issue as the editorial board may deem fit. The core fields include development encompassing agriculture, industry, regional trade, social sectors like health and education and development policy across the region and in specific countries in a comparative perspective.