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Size Does Matter: Technical and Scale Efficiency in Indian State Tax Jurisdictions
Author(s) -
Thirtle Colin,
Shankar Bhavani,
Chitkara Puneet,
Chatterjee Somnath,
Mohanty Madhu S.
Publication year - 2000
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/1467-9361.00099
Subject(s) - economics , inefficiency , data envelopment analysis , index (typography) , value added tax , gross domestic product , tax credit , econometrics , public economics , macroeconomics , microeconomics , mathematics , statistics , world wide web , computer science
Data Envelopment Analysis (DEA) is used to measure tax efficiency in 15Indian states from 1980/81 to 1992/93. Tax efficiency is shown to be conditional on state gross domestic product (SDP), agriculture’s share in state SDP,and a poverty index. The considerable remaining efficiency differences areattributable to the small size of some tax jurisdiction rather than to technical inefficiency. Multilateral Malmquist tax indices show that six of the states were consistently efficient, while three were consistently inefficient. Tax efficiency grew at an average annual rate of 3.9% until 1986/87, but growth ceased after that date for all but two states.