The Effect of Tax Structure Diversification on Government Revenues: A Case Study of Non-Oil Countries

Abstract

This study seeks to examine tax structures by analysing their types and components across a sample of non-oil economies, assessing their impact on government revenue levels. It investigates the relationship between tax structures and sustainable public revenue growth, incorporating a governance analysis of corruption control and political stability within this context. The research evaluates tax structures comprising income taxes, international trade tariffs, and consumption-based levies using a robust panel ARDL-PMG approach to determine their direct and indirect effects on public revenue generation. While income taxes and trade tariffs serve as primary drivers of long-term public funding, ineffective corruption management systems weaken these tax policies by generating adverse bundle effects. Additionally, the study explores the varying impacts of tax structure diversification on government revenue. The analysis is based on data from the World Bank, covering the period from 2000 to 2020, and includes Argentina, Costa Rica, the Dominican Republic, and El Salvador. The findings indicate that tax structures significantly influence public revenue generation in non-oil economies. Taxation efficiency is highly dependent on corruption control; as well-developed anti-corruption frameworks substantially enhance revenue collection. Long-term analysis reveals that political stability does not exert a significant direct effect on revenue generation, suggesting that non-oil economies rely more on governance quality than on political conditions.