Chart 1: Taxpayers Relative to Population
This chart illustrates the relationship between the ratio of taxpayers to the population in a country and the log of per capita GDP. It compares India with other countries, including the United States, Brazil, China, and Turkey. The solid line represents the line of best fit.
The chart shows that India has a relatively low ratio of taxpayers to the population compared to other countries, especially when considering its level of economic development. This suggests that India's tax effort, measured by the number of taxpayers, is lower than expected for a country with its level of GDP per capita.
Chart 2: Taxpayers/Population Controlling for Democracy Score
This chart builds upon the previous one by controlling for the level of democracy in each country. It compares the residuals of the taxpayers to population ratio on the Polity IV score with the residuals of the log GDP per capita on the Polity IV score.
The chart reveals that India is a negative outlier when it comes to the relationship between democracy and tax effort. Despite being a consistently democratic country for the last half-century, India has the lowest per capita GDP among democratic countries. Additionally, its tax effort, measured by the number of taxpayers to per capita GDP, is significantly lower than what one might expect for a democracy.
These charts highlight the challenges India faces in terms of tax collection and revenue generation, which are crucial for funding public services and infrastructure. They also suggest that India's democratic institutions may not have fully translated into effective tax collection and economic development.
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