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Tax Elasticity in Sierra Leone: A Time Series Approach

Author

Listed:
  • Brima Ibrahim Baimba Kargbo

    (National Social Security and Insurance Trust, Sierra Leone)

  • Adegbemi Festus O. Egwaikhide

    (Department of Economics, University of Ibadan, Nigeria)

Abstract

The fiscal authorities in Sierra Leone introduced series of reforms in the tax system ranging from continual revisions in tax rate to harmonization and instituting new taxes that are relatively easy to collect. Despite these measures, the output of the tax system as measured by the tax/GDP ratio remains very low averaging 11 per cent contributing to higher fiscal deficits. This study examined the base elasticity of the tax system in Sierra Leone and its major handles using annual data covering the period between 1977and 2009.The Singer method of dummy variables was employed in order to make adjustment for the effect of discretionary tax measures and then compare buoyancy and elasticity measures. The empirical results indicated that buoyancy estimates were higher than elasticity estimates; and that short-run elasticities were lower than the static long-run elasticities. Estimation results further showed that discretionary tax measures were effective in mobilizing additional tax revenues and that the tax system was inelastic during the period.

Suggested Citation

  • Brima Ibrahim Baimba Kargbo & Adegbemi Festus O. Egwaikhide, 2012. "Tax Elasticity in Sierra Leone: A Time Series Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 2(4), pages 432-447.
    • Handle: RePEc:eco:journ1:2012-04-6
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    References listed on IDEAS

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    Cited by:

    1. Imtiaz Arif, Lubna Khan, Faheem Hussain, 2017. "Impact of Semi-Autonomous Revenue Authority on Tax Revenue and Buoyancy: Evidence from Pakistan," Journal of Finance and Economics Research, Geist Science, Iqra University, Faculty of Business Administration, vol. 2(2), pages 164-174, October.
    2. repec:gei:journl:v:2:y:2017:i:2:p:165-175 is not listed on IDEAS
    3. Francis Kwaw Andoh & Nehemiah E. Osoro & Eliab Luvanda, 2019. "Growth Dynamics of Value-Added Tax Revenue in Ghana," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 13(2), June.

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    More about this item

    Keywords

    Tax elasticity; Tax Buoyancy; Tax Revenue; Sierra Leone;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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