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Tax Buoyancies in Guyana

In: Economic Challenges in Early 21st Century Guyana

Author

Listed:
  • Elton Bollers

    (University of the West Indies, Mona
    University of Guyana)

  • Joel Walcott

    (University of Guyana)

Abstract

The efficiency of the tax system can be estimated by buoyancy coefficients. Understanding the nature of the taxes and whether they are regressive, progressive, or buoyant is vital for making fiscal policy. Using Error Correction Models (ECM) and data from 1990 to 2020, this chapter estimates the coefficients for short-run buoyancy, long-run buoyancy, and the speed of adjustment per tax category in Guyana. A dummy variable was included to account for discretionary changes in tax rates. Similar to the literature, the results showed that total taxes are non-buoyant in the short-run. We found taxes to be non-buoyant in the long-run. Similarly, the individual taxes assessed were also non-buoyant in both long-run and short-run, with the exception of excise tax, which is buoyant in the long-run. Although excise tax is buoyant in the long-run, its speed of adjustment is slow. Based on these findings, it is imperative that policymakers design tax policy with consideration of its responsiveness to changes in national output.

Suggested Citation

  • Elton Bollers & Joel Walcott, 2024. "Tax Buoyancies in Guyana," Springer Books, in: Dianna DaSilva-Glasgow & Tarron Khemraj & Desmond Thomas (ed.), Economic Challenges in Early 21st Century Guyana, chapter 0, pages 155-180, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-75019-9_6
    DOI: 10.1007/978-3-031-75019-9_6
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    More about this item

    Keywords

    Error Correction model; Fiscal policy; Optimal taxation; Tax buoyancy; Guyana;
    All these keywords.

    JEL classification:

    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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