The Laffer Curve and Government Optimization of the Tax Revenues: The Cartagena De Indias Case

35 Pages Posted: 13 Apr 2007

See all articles by Daniel Toro González

Daniel Toro González

Universidad Tecnológica de Bolívar (UTB); WSU

Martha Doria

Universidad Tecnologica de Bolivar

Date Written: April 2007

Abstract

The public managers worries to increase the local government revenues are almost always related with changes in the tax rates, affecting all the agents in the economy. However, at the same time tax exemptions are used like policy instrument in order to achieve economic growth in some sectors, increasing the pressure over some other sectors. This document analyzes the effect of the tax rate changes over the local government revenues by the estimation of elasticities. This relation is known as the Laffer Curve. The main results show an inelastic relation between the tax rate and the revenues, which means that an increase of 1% in the tax rate generates an increase in local government revenues in less than a 1%. The results of the model suggest that a local policy oriented to raise the local government revenues increasing the tax rate is not effective.

Note: Downloadable document is in Spanish

Keywords: Cartagena, local government revenues, tax rates, Laffer Courve

JEL Classification: H21, H30

Suggested Citation

Toro González, Daniel and Doria, Martha, The Laffer Curve and Government Optimization of the Tax Revenues: The Cartagena De Indias Case (April 2007). Available at SSRN: https://ssrn.com/abstract=979743 or http://dx.doi.org/10.2139/ssrn.979743

Daniel Toro González (Contact Author)

Universidad Tecnológica de Bolívar (UTB) ( email )

Manga Calle del Bouquet
Campus de Ternera, Parque Industrial y Tecnológico
Cartagena, Bolívar
Colombia

WSU

Pullman, WA 99164
United States

HOME PAGE: http://cahnrs-cms.wsu.edu/ses/Pages/default.aspx

Martha Doria

Universidad Tecnologica de Bolivar ( email )

Manga Calle del Bouquet
Campus de Ternera, Parque Industrial y Tecnológico
Cartagena, Bolívar
Colombia

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