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How Buoyant is the Tax System? New Evidence from a Large Heterogeneous Panel
Author:
Mr. Paolo Dudine
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and
João Tovar Jalles
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Series:
IMF Working Papers
Volume/Issue:
Volume 2017: Issue 004
Language:
English
Publication Date:
19 Jan 2017
DOI:
https://doi.org/10.5089/9781475569797.001
ISBN:
9781475569797
ISSN:
1018-5941
Pages:
33
Keywords:
WP; tax buoyancy; tax revenue; buoyancy estimate; buoyancies help; tax elasticity; recession; error correction model; pooled mean group; short vs long run; fiscal sustainability; buoyancy coefficient; tax category; Corporate income tax; Personal income tax; Inflation; Emerging and frontier financial markets; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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In this paper we provide short- and long-run tax buoyancy estimates for 107 countries (distributed between advanced, emerging and low-income) for the period 1980–2014. By means of Fully-Modified OLS and (Pooled) Mean Group estimators, we find that: i) for advanced economies both long-run and short-run buoyancies are not different from one; ii) long run tax buoyancy exceeds one in the case of CIT for advanced economies, PIT and SSC in emerging markets, and TGS for low income countries, iii) in advanced countries (emerging market economies) CIT (CIT and TGS) buoyancy is larger during contractions than during times of economic expansions; iv) both trade openness and human capital increase buoyancy while inflation and output volatility decrease it.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund