The Effect of Globalization on Tax Capacity and Tax Effort in Selected Countries: Panel Threshold Model Approach

The main goal of this paper is to consideration the effect of globalization on tax capacity and tax effort in selected countries. For this purpose, the KOF index of globalization and statistical data for the period 1998-2014 based on panel data regression threshold is used. According to the position of tax revenues in the implementation of development projects and economic development, it is essential to estimate the real power to tax based on panel threshold model approach in period of 1998-2014. Based on the results the threshold value is equivalent to 4.45 percent. The results show that if the growth of the globalization index of more than 4. 45 percent the effect of the variable impact of institutional quality, political stability, urban development, urban population and per capita income on the tax capacity and tax effort to have been positive. This is despite the fact that the impact of these variables as indicators of global growth rate of less than 4.45 percent or less. Finally results show that the effect of the globalization index on the tax capacity and tax efforts is equivalent to 0.026. The growth of globalization will lead to increased tax capacity and tax effort equivalent to 0.026 percent.