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The Measurement of Tax Elasticity in India: A Time Series Approach

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  • Acharya, Hem

Abstract

Revenue generation is an important goal of tax reform. The built-in responsiveness of revenues to changes in income, tax elasticity, provides very critical information for tax policy formulation. This paper utilises a time series approach to empirically estimate tax elasticities for India for the period 1991-2010. Tax elasticities are computed for income, turnover, excise, import and total taxes for the post-reform period. The elasticity coefficients reveal a low responsiveness of taxes to income growth and the value being less than unity in most of the cases.

Suggested Citation

  • Acharya, Hem, 2011. "The Measurement of Tax Elasticity in India: A Time Series Approach," MPRA Paper 47090, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:47090
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    File URL: https://mpra.ub.uni-muenchen.de/47090/2/MPRA_paper_47090.pdf
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    References listed on IDEAS

    as
    1. John Creedy & Norman Gemmell, 2010. "The Elasticity of Taxable Income and the Tax Revenue Elasticity," Department of Economics - Working Papers Series 1110, The University of Melbourne.
    2. Ehdaie, Jaber, 1990. "An econometric method for estimating the tax elasticity and the impact on revenues of discretionary tax measures : applied to Malawi and Mauritius," Policy Research Working Paper Series 334, The World Bank.
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    Cited by:

    1. Nepal Rastra Bank, 2017. "Elasticity and Buoyancy of Taxation in Nepal: A Revisit of the Empirical Evidence," NRB Economic Review, Nepal Rastra Bank, Economic Research Department, vol. 29(1), pages 19-32, April.
    2. Nepal Rastra Bank & Nepal Rastra Bank, 2018. "Macro Modeling Practices at Nepal Rastra Bank," NRB Economic Review, Nepal Rastra Bank, Economic Research Department, vol. 30(1), pages 1-18, April.

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    More about this item

    Keywords

    Tax; Indian Tax; Tax Elasticity;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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