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Tax Buoyancy in OECD Countries

Author

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  • Vincent Belinga
  • Ms. Dora Benedek
  • Ruud A. de Mooij
  • Mr. John Norregaard

Abstract

By how much will faster economic growth boost government revenue? This paper estimates short- and long-run tax buoyancy in OECD countries between 1965 and 2012. We find that, for aggregate tax revenues, short-run tax buoyancy does not significantly differ from one in the majority of countries; yet, it has increased since the late 1980s so that tax systems have generally become better automatic stabilizers. Long-run buoyancy exceeds one in about half of the OECD countries, implying that GDP growth has helped improve structural fiscal deficit ratios. Corporate taxes are by far the most buoyant, while excises and property taxes are the least buoyant. For personal income taxes and social contributions, short- and long-run buoyancies have declined since the late 1980s and have, on average, become lower than one.

Suggested Citation

  • Vincent Belinga & Ms. Dora Benedek & Ruud A. de Mooij & Mr. John Norregaard, 2014. "Tax Buoyancy in OECD Countries," IMF Working Papers 2014/110, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2014/110
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    References listed on IDEAS

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    1. Mr. John Norregaard, 2013. "Taxing Immovable Property Revenue Potential and Implementation Challenges," IMF Working Papers 2013/129, International Monetary Fund.
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    5. Upender, M., 2008. "Degree Of Tax Buoyancy In India : An Empirical Study," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 5(2).
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    Cited by:

    1. Gilles Mourre & Savina Princen, 2015. "Tax Revenue Elasticities Corrected for Policy Changes in the EU," European Economy - Discussion Papers 018, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    2. Deli, Yota & Rodriguez, Abian Garcia & Kostarakos, Ilias & Varthalitis, Petros, 2018. "Dynamic tax revenue buoyancy estimates for a panel of OECD countries," Papers WP592, Economic and Social Research Institute (ESRI).
    3. Lyu, Bingyang & Ma, Guangrong & Zhan, Jingnan, 2022. "The trade-off between risk and incentives in fiscal federalism: Evidence from China," Journal of Comparative Economics, Elsevier, vol. 50(4), pages 1019-1035.
    4. Nazila Alinaghi & W. Robert Reed, 2021. "Taxes and Economic Growth in OECD Countries: A Meta-analysis," Public Finance Review, , vol. 49(1), pages 3-40, January.
    5. Hrushikesh Mallick, 2021. "Do governance quality and ICT infrastructure influence the tax revenue mobilisation? An empirical analysis for India," Economic Change and Restructuring, Springer, vol. 54(2), pages 371-415, May.
    6. Vugar Ahmadov & Ulvi Sarkarli & Ramiz Rahmanov, 2017. "Structural Budget Balances in Oil-rich Countries: The Cases of Azerbaijan, Kazakhstan, and Russia," Working Papers 1704, Central Bank of Azerbaijan Republic.
    7. Martina Yakova, 2019. "Tax buoyancy of the EU-28 countries – a comparative analysis," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 59-73.
    8. Koester, Gerrit & Priesmeier, Christoph, 2017. "Revenue elasticities in euro area countries," Working Paper Series 1989, European Central Bank.
    9. Chakraborty, Lekha S & Thomas, Emmanuel & Gandhi, Piyush, 2019. "Natural Resources Revenue Buoyancy in India: Empirical Evidence From State-specific Mining Regime," MPRA Paper 99293, University Library of Munich, Germany, revised 2020.
    10. Serhan Cevik, 2018. "Unlocking Pakistan’s Revenue Potential," South Asian Journal of Macroeconomics and Public Finance, , vol. 7(1), pages 17-36, June.
    11. Lagravinese, Raffaele & Liberati, Paolo & Sacchi, Agnese, 2020. "Tax buoyancy in OECD countries: New empirical evidence," Journal of Macroeconomics, Elsevier, vol. 63(C).
    12. Q. Lafféter & M. Pak, 2015. "Tax elasticity to business cycle: an overview of three taxes from 1979 to 2013 in France," Documents de Travail de l'Insee - INSEE Working Papers g2015-08, Institut National de la Statistique et des Etudes Economiques.
    13. Gilles Mourre & Aurélien Poissonnier, 2019. "What Drives the Responsiveness of the Budget Balance to the Business Cycle in EU Countries?," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 54(4), pages 237-249, July.
    14. Robert C. M. Beyer & Lazar Milivojevic, 2021. "Fiscal policy and economic activity in South Asia," Review of Development Economics, Wiley Blackwell, vol. 25(1), pages 340-358, February.
    15. Fulgence Dominick Waryoba, 2018. "Import Base and Revenue Improvement Possibilities in Tanzania," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 4(1), pages 21-28, March.
    16. Athanasios O. Tagkalakis, 2014. "Is there any evidence of VAT related buoyancy effects in Greece?," Economics Bulletin, AccessEcon, vol. 34(3), pages 1762-1775.
    17. Audi, Marc & Ali, Amjad & Roussel, Yannick, 2021. "Measuring the Tax Buoyancy: Empirics from South Asian Association for Regional Cooperation (SAARC)," MPRA Paper 109567, University Library of Munich, Germany.
    18. Udai Lal Paliwal & Nitin Kishore Saxena & Ashutosh Pandey, 2019. "Analysing the Impact of GST on Tax Revenue in India: The Tax Buoyancy Approach," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 514-523.
    19. Bassey Okon Ebi & Oluwafemi Ayodele, 2017. "Tax Reforms and Tax Yield in Nigeria," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 768-778.
    20. Chakraborty, Lekha S. & Thomas, Emmanuel & Gandhi, Piyush, 2020. "Natural Resources Revenue Buoyancy in India: Empirical Evidence From State-specific Mining Regime," Working Papers 20/313, National Institute of Public Finance and Policy.

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