Does E-Government Improve Government Capacity? Evidence from Tax Compliance Costs, Tax Revenue, and Public Procurement Competitiveness

Jul 19, 2026

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Using cross-country data on e-government systems, the paper evaluates whether e-filing of taxes and e-procurement implementation enhance governments’ capacity to raise and spend fiscal resources. The analysis links e-filing to lower tax compliance costs, measured through preparation and payment time, reduced firm tax official visits, and fewer perceptions of tax administration as a barrier. E-filing also shows a moderate increase in the income tax revenue-to-GDP ratio, while e-procurement effects are weaker and depend on development and institutions; no strong corruption relationship is found.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages20

Reading Time50 min

Abstract

Tax compliance costs and e-filing

Tax revenue effects

E-procurement and procurement competitiveness

Corruption relationship

Pub lic Disclosure Authorized Pub lic Disclosure Authorized The World Bank Economic Review, 34(1), 2020, 101–120 doi: 10.1093/wber/lhx024 Article Does E-Government Improve Government Capacity? Evidence from Tax Compliance Costs, Tax Revenue, and Public Procurement Competitiveness Anna Kochanova, Zahid Hasnain, and Bradley Larson Abstract Using cross-country data on e-government systems, this paper analyzes whether e-filing of taxes ande-procurement implementation improves the capacity of governments to raise and spend fiscal resources through lowering tax compliance costs, improving tax collection and public procurement competitiveness, and reducing corruption. Adopting e-filing systems reduces tax compliance costs as measured by the time to prepare and pay taxes, the likelihood and frequency of firms being visited by a tax official, and the perception of tax administration as an obstacle to firms’ operation and growth. E-filing is also associated with a moderate increase in the income tax revenue to GDP ratio. The results for e-procurement are weaker, with the number of firms securing or attempting to secure a government contract increasing only in countries with higher levels of development and better institutions. There is no strong relationship between e-government and corruption. JEL classification: H11, H26, H57, O38 Keywords: e-government, tax compliance costs, tax revenue, public procurement, corruption Economic development requires a government that can successfully implement policies, protect property rights, and deliver public goods and services. A necessary prerequisite is the ability to raise and spend fiscal resources effectively. But many governments, particularly in low- and middle-income countries, lack these capacities (Besley and Persson 2010) . High tax compliance costs due to cumbersome regulations and harassment by tax officials deter investment, encourage tax evasion, and undermine economic growth (Hindriks, Keen, and Muthoo 1999; Djankov, McLiesh, and Ramalho 2006; Coolidge 2012; Alm, Martinez-Vazquez, and McClellan 2016; Jerbashian and Kochanova 2016) . The public procurement of goods and services is often rife with collusive practices and corruption, resulting in the misallocation or waste of resources and poor-quality infrastructure (Auriol, Straub, and Flochel 2016; Center for Global Development 2014) . Anna Kochanova (corresponding author) is a lecturer at Cardiff Business School, Cardiff, UK. During the writing of this paper, she was a senior research fellow at the Max Planck Institute for Research on Collective Goods, Bonn, Germany; her email address is [kochanovaa@cardiff.ac.uk. Zahid Hasnain](kochanovaa@cardiff.ac.uk. Zahid Hasnain) is the Global Lead for Human Resource Management at the World Bank Group; his email address is [zhasnain@worldbank.org. Bradley Larson is a research analyst on the World Development](zhasnain@worldbank.org. Bradley Larson is a research analyst on the World Development)[ ](zhasnain@worldbank.org. Bradley Larson is a research analyst on the World Development)Report at the World Bank; his email address is [blarson@worldbank.org. The](blarson@worldbank.org. The) authors thank the editors, Andrew Foster and Eric Edmonds, and three anonymous referees, as well as Sinem Ayhan, Ioanna Grypari, Hanjo Hamann, Vahagn Jerbashian, Philip Keefer, and Bob Rijkers, for their insightful comments. A supplementary online appendix for this article can be found on The World Bank Economic Review website. © The Author(s) 2018 . Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / THE WORLD BANK. All rights reserved. For permissions, please e-mail: [journals.permissions@oup.com](journals.permissions@oup.com) Downloaded from [https://academic.oup.com/wber/article/34/1/101/5025102 by International Monetary Fund user on 23 June 2021](https://academic.oup.com/wber/article/34/1/101/5025102 by International Monetary

FAQs

How does e-filing affect tax compliance costs?

E-filing reduces tax compliance costs by lowering the time to prepare and pay taxes, the likelihood and frequency of firm visits by tax officials, and perceptions of tax administration as an obstacle to firm operation and growth.

What is the impact of e-filing on tax revenue?

E-filing is associated with a moderate increase in the income tax revenue-to-GDP ratio.

Do the findings show a strong link between e-government and corruption?

No strong relationship is found between e-government and corruption, based on the study’s evidence.

Jul 19, 2026

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