How Buoyant is the Tax System? New Evidence from a Large Heterogeneous Panel

IMF Working Papers, January 19, 2017

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For advanced economies both long-run and short-run buoyancies are not different from one.
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.
In advanced countries (emerging market economies) CIT (CIT and TGS) buoyancy is larger during contractions than during times of economic expansions.
Both trade openness and human capital increase buoyancy while inflation and output volatility decrease it.

Subject: Corporate income tax, Emerging and frontier financial markets, Financial markets, Inflation, Personal income tax, Prices, Revenue administration, Taxes
Keywords: buoyancies help, buoyancy coefficient, buoyancy estimate, Corporate income tax, Emerging and frontier financial markets, error correction model, fiscal sustainability, Global, Inflation, Personal income tax, pooled mean group, recession, short vs long run, tax buoyancy, tax category, tax elasticity, tax revenue, WP

Pages: 33
Main contribution: Cross-country evidence on short- and long-run tax buoyancy across tax categories and income groups, and identification of macroeconomic and structural drivers of buoyancy (trade openness, human capital, inflation, output volatility).

Paolo Dudine and João Tovar Jalles, IMF Working Paper, January 19, 2017.

How Buoyant is the Tax System?
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