Estimation of tax elasticities in Iran by different types of taxes: a Non-linear and asymmetric approach

Document Type : Original Article

Authors

1 PhD Student in Economics,, Faculty of Economics and Entrepreneurship, Razi University, Kermanshah, Iran.

2 Associate Professor of Economics, Faculty of Economics and Entrepreneurship, Razi University, Kermanshah, Iran.

Abstract

Tax is one of the most important sources of revenue for governments and one of the political tools to improve the distribution of income. In this regard, it is important and valuable to evaluate the reaction of various types of tax income to economic growth in order to know the country's tax capacity. This  research, by applying the quantile regression approach and Nonlinear Autoregressive Distributed Lag  and using the statistical evidence of Iran over 1981-2019, shows that in high tax quantiles, the positive effect of economic growth on taxes has increased in all types of taxes. Also, considering that goods and services tax has the highest share in tax revenues, its low tax elasticity can greatly reduce the stability of government revenues. But direct taxes, income tax and salary tax, due to their higher elasticity, play an important role in the stability of the government's income, the confirmation of the symmetrical effects of positive and negative economic growth shocks on all types of taxes shows that the tax is low compared to the potential capacity. Tax and the inability of the tax system to implement the tax efficiently. Therefore, focusing on the development of activities with high added value and taxes with higher elasticity will play an important role in the stability of the government's income.

Keywords

Public Sector Economics Studies
Volume 2, Issue 2
September 2023
Pages 135-150

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History

  • Receive Date: 12 January 2023
  • Revise Date: 25 March 2023
  • Accept Date: 03 April 2023

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