Assessing the Variability of Indirect Tax Elasticity in Greece

22 Pages Posted: 11 Aug 2022

Date Written: January 1, 2014

Abstract

This paper shows that the variability of indirect tax elasticity relative to GDP has increased significantly in recent years in Greece. Based on this finding we show that the budgetary sensitivity of indirect taxes following a 1% change in real GDP has increased dramatically since 2010. This finding has substantial policy implications; failure to account for these higher elasticities will lead to recurrent revenue shortfalls requiring new policy measure to meet previously set fiscal targets. This could lead to a downward spiral of continuously declining economic activity, new revenue shortfalls and additional fiscal measures and so on.

Keywords: indirect taxes; elasticity; GDP; Greece

JEL Classification: C32; E32; H20; O52

Suggested Citation

Tagkalakis, Athanasios, Assessing the Variability of Indirect Tax Elasticity in Greece (January 1, 2014). Bank of Greece Working Paper No. 171, Available at SSRN: https://ssrn.com/abstract=4184378 or http://dx.doi.org/10.2139/ssrn.4184378

Athanasios Tagkalakis (Contact Author)

Bank of Greece ( email )

21 E. Venizelos Avenue
GR 102 50 Athens
Greece

University of Patras

Patra
Greece

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