@article{02e4575362914d86a293a0eb23f97110,
title = "Building fiscal capacity in developing countries: Evidence on the role of information technology",
abstract = "Weak fiscal capacity is a major challenge in low-income countries. Recently, governments have adopted information technology to modernize tax collection; however, there is little evidence on the impact of such reforms. We narrow this gap using unique administrative firm-level panel data covering all business taxpayers in Ethiopia. We find a robust increase in value-added tax collections and reported sales following the adoption of electronic sales register machines (ESRMs), without decreasing formal employment. These effects are larger among downstream firms. ESRM adoption is also associated with a decrease in entry into downstream sectors.",
keywords = "Developing economy, Fiscal capacity, Information technology, Taxation",
author = "Merima Ali and Shifa, {Abdulaziz B.} and Abebe Shimeles and Firew Woldeyes",
note = "Funding Information: We thank editor William Gentry, coeditor Stacy Dickert-Conlin, and three anonymous referees for helpful comments. We are thankful to officials at the ERCA for access to the data and other relevant documents. We thank the International Center for Taxation and Development and the African Development Bank, both for financial support and useful feedback. We thank seminar participants at Cornell University, Working Group in African Political Economy workshops at New York University Abu Dhabi and Penn State University, and the 2018 Annual National Tax Association conference. Funding Information: 2 The 2015 per capita GDP for sub-Saharan Africa was US$3,755 (World Development Indicators online data bank, accessed on April 8, 2019). 3 The TSRP was supported by the World Bank as part of the Public Sector Capacity Building Program Support Project that was undertaken during the period 2003–2010 (World Bank, 2013). 4 Failure to issue receipts may lead to legal punishments — both financial and prison sentences. The legislation for VAT registration exempted smaller firms. For a detailed theoretical discussion on the optimal VAT threshold, see Keen and Mintz (2004). 5 See Schreiber (2018) for a more detailed discussion on Ethiopia{\textquoteright}s tax reforms. Publisher Copyright: {\textcopyright} 2021 National Tax Association. All rights reserved.",
year = "2021",
month = sep,
doi = "10.1086/715511",
language = "English (US)",
volume = "74",
pages = "591--620",
journal = "National Tax Journal",
issn = "0028-0283",
publisher = "National Tax Association",
number = "3",
}