The Estimation of Tax Capacity in Oil Exporting Countries: A Panel Data Approach

Abstract:

The tax capacity is one of the main concepts in public finance and

provides the required information on state economic power in

mobilizing the tax resources for responding the financial problems

and execution of economic policies. For this purpose, the main

objective of this paper is to estimate the tax capacity for oil

exporting countries over the period of 1995-2008 by applying panel

data approach. The summary of results indicates that the GDP per

capita and trade openness are the main factors affecting the ratio of

tax revenue to GDP. Also, the empirical findings of this study

reveal that countries with a low share of oil exports have more

Potential tax capacities. Moreover, the potential tax capacity of Iran

is the same as its actual tax during the period of study.