Tax Expenditure Reporting as a Commitment Device: Evidence from Emerging and Developing Countries

Do tax expenditure reports actually improve revenue performance, or are they merely exercises in institutional compliance? This paper provides cross-country causal evidence on this question. Using a panel of 151 emerging and developing countries over 1990-2024 and exploiting staggered, non-absorbing variation in the publication of tax expenditure reports, we estimate the dynamic revenue effects via the local projections difference-in-differences estimator of Dube et al. (2025). We find that TE reporting raises tax revenue in the medium run, with robust gains emerging six to seven years after publication. The effect is concentrated in direct taxes and is stronger where reporting is regular and intensive, especially in low-income developing countries and Sub-Saharan Africa. These patterns are consistent with TE reporting operating, in the broader institutional sense, as a commitment device that raises the political cost of opaque tax preferences and gradually strengthens revenue mobilization.