The purpose of this paper is to estimate the variables affecting the efficiency of tax collection and to calculate tax capacity of Golestan province. For this purpose, the coefficients of the regression model are estimated based on time series and cross section data of 28 provinces of Iran by using panel data method during 2000-2005. Our findings demonstrate that value added of industry and mine, housing and constructions, and service sections have positive and significant effect on tax collection in province level. But per capita income does not have significant effect. Average tax effort, actual average tax efficiency and potential average tax efficiency were respectively 0.88, 1.18 and 1.35 in the province of Golestan.