Tax Elasticity and Buoyancy in Nepal: A Revisit

Timsina, Neelam

doi:10.3126/nrber.v19i1.52985

Cited by 6 publications

(5 citation statements)

References 3 publications

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“…An accurate revenue budget is vital for a government to understand how to improve its economic planning; currently there is no consistent method that can be adjusted to all scenarios and that reflects reality. Timsina (2020) measured the elasticity and buoyancy of VAT in Nepal to determine whether the tax system was elastic or inelastic. Their conclusion was that, for the period 1975-2005, the tax system was inelastic (less than one), meaning that most revenue collection was generated by discretionary changes in tax policy, rather than automatic responses.…”

Section: Documentary Reviewmentioning

confidence: 99%

Elasticities of VAT Collection and Mexican Imports: Analysis by subchapters in the period 2010-2022

Moreno Espinosa,

Mata Mata,

Hernández Cortés

et al. 2023

TAJ

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This article obtained the elasticities of the Value Added Tax (VAT) collection with respect to merchandise imports classified in the 689 subchapters of the International Harmonized System 2010-2022. Evidence of an equilibrium relationship, in the long run, was found by cointegration in a VEC model. The results show that 65 subchapters explain 80% of the value of imports with different elasticities, which allows identifying the sensitivity of VAT collection in generating income from imports. The subchapters that stand out are plastic tubes and accessories, (elasticity 1.4622), devices for cutting or connecting electrical circuits (elasticity 1.3542), rubber and inflatable joints (elasticity 1.3513), electrical ignition devices and devices for motors (elasticity 1.3340) and plastic containers (elasticity 1.3173). Elasticities allow calculating increases in VAT collection due to movements in the value of imports, such as increases in VAT of US$ 212 million due to movements in the import of machinery, appliances, and mechanical devices.

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Section: Documentary Reviewmentioning

confidence: 99%

Elasticities of VAT Collection and Mexican Imports: Analysis by subchapters in the period 2010-2022

Moreno Espinosa,

Mata Mata,

Hernández Cortés

et al. 2023

TAJ

View full text Add to dashboard Cite

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“…Mukariam (2001) [13] used ordinary least squares (OLS) regression techniques for analysis and the results showed that, customs and domestic taxes were relatively rigid for the period under investigation. In another study in Nepal, Timsina (2008) [26] sort to estimate the elasticity and the buoyancy of the tax system in Nepal. Timsina (2008) [26] used annual time series on tax revenue data for the period from 1975 -2005.…”

Section: Literature Reviewmentioning

confidence: 99%

“…In another study in Nepal, Timsina (2008) [26] sort to estimate the elasticity and the buoyancy of the tax system in Nepal. Timsina (2008) [26] used annual time series on tax revenue data for the period from 1975 -2005. The study ~ 77 ~ used partitioning approach to estimate and measure the elasticity coefficients for the different taxes in Nepal.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Tax elasticity estimates the tax revenue response to a change in national income/output (nominal Gross Domestic Product (GDP)) or movements in economic activity but after correction for any changes in the tax rates, tax base or the tax structure (Timsina, 2008) [26] . Unlike tax buoyancy, the estimation of tax elasticity requires that discretionary measures be controlled or adjusted from the actual revenue.…”

Section: Tax Elasticity Estimationmentioning

confidence: 99%

“…The necessity to raise and accumulate adequate domestic revenue against the backdrop of high public expenditure in Kenya has been the primary motivation for tax base reforms with aim of diversifying tax base and increased (Muriithi and Moye, 2003) [14] . Tax elasticity measures the responsiveness of tax revenue yields to a change in national income/output (nominal Gross Domestic Product (GDP)) or movements in economic activity after correction for any changes in the tax rates, tax base and the tax structure (Timsina, 2008) [26] . The concepts of elasticity in tax administration helps in determination of productivity of the tax structure and system.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

A mathematical approach to determination of tax elasticity as a measure of direct tax productivity in Kenya

Ombasa,

Ondieki,

Langat

2019

Int. J. Finance Manage. Econ.

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This research paper provides an eleven -year analysis of historical direct tax revenue performance and productivity in Kenya. The paper aims to give insights and inform budget making processes, planning and monitoring in Kenya by ensuring a balanced budget through productive tax yields. This paper is grounded on the basis that a good fiscal policy structures and system ensures stable government revenues through fair and sound taxation over time, improves efficiency and equity of taxes while promoting investment towards accumulation of wealth/national income and economic growth. Government of Kenya has continuously pursued tax reform agenda to increase its domestic's tax revenues mobilization. This study examined the elasticity of direct income taxes as a measure of tax productivity in Kenya. Specifically, the paper examined the elasticity of Corporation tax, Property taxes (rental taxes) and personal income taxes as components of direct government tax revenues with respect to the changes in national income/ GDP at factor income as a proxy base. The study population for the research was the years from 2007 to 2017 financial year spanning for a period of 11 years. The study relied on secondary data and employed a time series approach and techniques to estimate tax elasticity for various component of direct income taxes in Kenya for a period ranging from 2006/2007 to 2016/2017. Proportional Adjustment Method (PAM) model and Error Correction Mechanism (ECM) were adopted for data analysing. To check stationarity of the time series data, Phillips Perron (PP) test and Augmented-Fuller (ADF) test for unit root test techniques were adopted. The results revealed that direct taxes in Kenya are inelastic with elasticity value of 0.592 less than unit with an error correction coefficient of 0.7778. The study established that the direct tax revenue in Kenya is actually not responsive enough to changes in income growth since the coefficient of elasticity was less than a unity. Thus the system of direct taxes is not productive in general. Based on the findings of this paper, we strongly recommend that the government of Kenya should strengthen tax reforms in order to increase the productivity of income tax revenue by broadening and expanding the tax base in Kenya.

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Tax capacity and growth in the Asia-Pacific region

Jalles

2020

Journal of the Asia Pacific Economy

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In this paper, we estimate short-and long-term tax buoyancy for 30 Asian-Pacific countries during 1980-2017 using recent panel techniques. Using Mean Group estimators, we found that the shortrun buoyancy is statistically not different from one, while the long-run buoyancy is statistically larger than one. In 11 out of 30 countries, growth has improved fiscal sustainability over time, while in only 4 out of 30 countries the tax system has acted as a good automatic stabilizer. Results are robust to the estimation with alternative estimators, the inclusion of inflation and tax rates. We uncovered that buoyancies increased in magnitude and significance over time. Lastly, resorting to nonlinear estimations of short-run buoyancies contingent on the phase of the business cycle, we find that buoyancy is generally larger during recessions.

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Tax Elasticity and Buoyancy in Nepal: A Revisit

Cited by 6 publications

References 3 publications

Elasticities of VAT Collection and Mexican Imports: Analysis by subchapters in the period 2010-2022

Elasticities of VAT Collection and Mexican Imports: Analysis by subchapters in the period 2010-2022

A mathematical approach to determination of tax elasticity as a measure of direct tax productivity in Kenya

Tax capacity and growth in the Asia-Pacific region

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