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The effect of economic factors on the tax ratio in Trinidad and Tobago

Author

Listed:
  • Sandra Sookram
  • George Saridakis

    (The University of the West Indies, Trinidad and Tobago
    Loughborough University, U.K)

Abstract

We focus on the potential economic factors of tax revenue in Trinidad and Tobago and present cointegration test statistics for a second order VAR(2) based on Johansen's maximum likelihood approach. Our results suggest a positive relationship between the level of income and the tax ratio and also that external debt and inflation impede the collection of taxes. Additionally, we find that the degree of openness exerts an insignificant impact on the tax ratio. Our study recommends potential areas that may be targeted in order to raise tax revenues and which may also raise the consciousness that tax reform is a very important subject matter.

Suggested Citation

  • Sandra Sookram & George Saridakis, 2009. "The effect of economic factors on the tax ratio in Trinidad and Tobago," Journal of Developing Areas, Tennessee State University, College of Business, vol. 42(2), pages 111-128, January-M.
    • Handle: RePEc:jda:journl:vol.42:year:2009:issue2:pp:111-128
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    Citations

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    Cited by:

    1. Galvis Ciro, Juan Camilo & Ferreira de Mendonça, Helder, 2016. "Inflation targeting and tax effort: Evidence from Colombia," MPRA Paper 90544, University Library of Munich, Germany, revised 14 Dec 2018.

    More about this item

    Keywords

    tax ratio; economic policy; cointegration; weak exogeneity; Trinidad and Tobago;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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