Determinants of Non-Hydrocarbon Revenue Mobilization in Algeria: Tax Base, Compliance, and Administrative Effectiveness in an ARDL-ECM Framework

Abstract This paper investigates the factors influencing the mobilization of non-hydrocarbon tax revenue in Algeria through the of tax-base expansion (final consumption expenditure, CE), tax compliance/ burden (non-hydrocarbon tax pressure, TP), and the administrative dimension (government effectiveness, GE). We applied the ARDL–ECM to annual time series data covering 2002–2024. We utilized the ADF and PP tests to show the variables are of order 1, and then tested, through the Pesaran bounds approach, to show evidence of cointegration. Specification chosen is ARDL (1,1,1,1) and CE shows a positive and long run statistically significant relationship with the growth of non-hydrocarbon tax revenue while TP is large and statistically significant whilst negative. GE is positive but statistically insignificant. In the short run, the individual differenced effects of a combination of the factors remain insignificant. There is a negative and significant error correction which shows adjustment to long-run equilibrium occurs slowly. Diagnostic and stability tests show the model is adequate. After factoring in the 2020 shock, the robustness tests documented a negative effect post 2020. This study shows the need for tax formalization, broadening the tax base, and implementing e-invoicing and risk-based tax compliance management rather than increasing tax pressure in low-compliance environments. JEL Classification : H21, C32, O55