Tax Buoyancy in OECD Countries

19 Pages Posted: 18 Jul 2014

See all articles by Vincent Belinga

Vincent Belinga

International Monetary Fund (IMF)

Dora Benedek

International Monetary Fund (IMF)

Ruud A. De Mooij

International Monetary Fund (IMF); CESifo (Center for Economic Studies and Ifo Institute); Oxford University Centre for Business Taxation

John Norregaard

Formerly with International Monetary Fund (IMF); Independent

Date Written: June 2014

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.

Keywords: Tax revenue, OECD, Personal income taxes, Corporate taxes, Property taxes, Tax systems, Automatic stabilizers, Economic growth, Econometric models, Regression analysis, Tax buoyancy, Error Correction Model, OECD., total tax revenue, tax revenues, tax rates, tax categories, income taxes, tax reforms, tax system, property tax, tax policy, fiscal sustainability, fiscal affairs department, tax compliance, fiscal policy, fiscal affairs, fiscal deficits, taxation, tax elasticity, tax mix, tax ratios, short-term tax, higher tax rates, public expenditures, corporate income taxes, tax base, excise taxes, public finances, fiscal balance, tax journal, tax bases, budget balances, government revenue, tax

JEL Classification: E62, H68

Suggested Citation

Belinga, Vincent and Benedek, Dora and De Mooij, Ruud A. and Norregaard, John, Tax Buoyancy in OECD Countries (June 2014). IMF Working Paper No. 14/110, Available at SSRN: https://ssrn.com/abstract=2468015

Vincent Belinga (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Dora Benedek

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Ruud A. De Mooij

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Oxford University Centre for Business Taxation ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

HOME PAGE: http://people.few.eur.nl/demooij/

John Norregaard

Formerly with International Monetary Fund (IMF) ( email )

700 19th Street, NW
Washington, DC 20431
United States

Independent ( email )

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