Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/146379
Authors: 
Havránek, Tomáš
Havránková, Zuzana
Schwarz, Jiří
Year of Publication: 
2015
Series/Report no.: 
IES Working Paper 23/2015
Abstract: 
Key parameters for the modeling of public finances are tax revenue elasticities with respect to tax bases. Yet the existing studies estimating these elasticities for emerging countries disregard the effects of tax reforms on tax revenue, which renders their estimates inconsistent. We use a unique data set from the Czech Republic to account for the effects of reforms and estimate both short- and long-run tax revenue elasticities. Our results suggest that the long-run elasticities are 1.4 for wage tax, 0.9 for value added tax, and 1.7 for profit tax. The adjustment process for value added tax is fast, but for the remaining two categories it is important to distinguish between the short- and long-run elasticities: the initial response of revenue to changes in the bases is weak. In the case of wage tax it takes half a year for the elasticity to surpass unity.
Subjects: 
tax revenue
tax base
elasticity
error correction models
JEL: 
H24
H25
H27
Document Type: 
Working Paper
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