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A comparable series of Tax Revenue Foregone

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  • Khera, Reetika
  • Somanchi, Anmol

Abstract

The estimate of tax revenue foregone by the government crashed in 2015-16 after steadily rising over the previous decade. This was, however, on account of substantive methodological revisions rendering the estimates incomparable across years. Reconstructing the series accounting for these revisions reveals that the crash entirely disappears. In absolute nominal terms, the tax revenues foregone have not increased and the share of direct revenues foregone (in the total) has increased. With significant changes to the overall tax architecture (e.g., the move from VAT to GST), it is unclear how useful the current method of calculating the tax revenue foregone series remains for an assessment of tax expenditures or latent fiscal space.

Suggested Citation

  • Khera, Reetika & Somanchi, Anmol, 2020. "A comparable series of Tax Revenue Foregone," IIMA Working Papers WP 2020-05-03, Indian Institute of Management Ahmedabad, Research and Publication Department.
    • Handle: RePEc:iim:iimawp:14626
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    References listed on IDEAS

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    2. Richard M Bird & Eric M Zolt, 2008. "Tax Policy in Emerging Countries," Environment and Planning C, , vol. 26(1), pages 73-86, February.
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