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Investigating the Iran Tax System Efficiency, Focusing Tax Buoyancy and Elasticity Indexes

Author

Listed:
  • Mohamadi Ahmadabadi, Zahra

    (Master of economics, Ilam University)

  • Darvishi, Bagher

    (Associate Professor of Economics, Ilam University)

Abstract

The main purpose of this study is to evaluate Iran`s tax system efficiency through tax elasticity and buoyancy indexes. In doing so, using tax income and tax base data on various types of direct and indirect taxes during the period of 1980-2015, initially the buoyancy of taxes was estimated by the ARDL and ECM models, and then, tax elasticity was estimated considering the proxy of tax policy and by a non-linear model. Eventually, the sensitivity of buoyancy estimation to inflation and economic expansion and economic contraction was evaluated. Results suggest that in long term buoyancy and elasticity for various taxes are almost equal. But in short terms, elasticity is greater than buoyancy. According to this fact, tax policies do not play a significant role in tax income increment, and tax income increases due to tax basis growth. Also, inflation only affects buoyancy rate in short terms, and longterm buoyancy is independent from the inflation changes. Furthermore, direct taxes are not flexible in terms of periods of economic expansion and economic contraction, and only taxes on goods and services have a compatible behavior into the periods of economic expansion and economic contraction

Suggested Citation

  • Mohamadi Ahmadabadi, Zahra & Darvishi, Bagher, 2020. "Investigating the Iran Tax System Efficiency, Focusing Tax Buoyancy and Elasticity Indexes," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 7(2), pages 1-26, August.
    • Handle: RePEc:ris:qjatoe:0186
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    More about this item

    Keywords

    Efficiency; Elasticity and Buoyancy; Iran tax system; Inflation; Economic expansion and contraction;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • 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
    • H29 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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