Estimation of Income Elasticity and Tax Capacity with Concentration on the Components of Tax Revenues in Khuzestan Province (in Persian)

Omid Hajati, Hassan Farazman (), Morteza Afagheh () and Seyed Aziz Armen
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Omid Hajati: Ph.D. Student, Department of Economics, and Social Sciences, Shahid Chamran University of Ahvaz, Khuzestan, Iran.
Hassan Farazman: Associate Professor, Department of Economics, and Social Sciences, Shahid Chamran University of Ahvaz, Khuzestan, Iran. Department of Economics, and Social Sciences, Shahid Chamran University of Ahvaz, Khuzestan, Iran.
Morteza Afagheh: Associate Professor, Department of Economics, and Social Sciences, Shahid Chamran University of Ahvaz, Khuzestan, Iran.
Seyed Aziz Armen: Professor, Department of Economics, and Social Sciences, Shahid Chamran University of Ahvaz, Khuzestan, Iran.

The Journal of Planning and Budgeting (٠صلنامه برنامه ریزی و بودجه), 2020, vol. 24, issue 4, 97-124

Abstract: The purpose of this article is to estimate the income elasticity and tax capacity of Khuzestan province for policy-making and regional planning based on tax pay ability. To this end, the direct and indirect tax revenues of the province were estimated using the Seemingly Unrelated Equations approach, for the period 2000- 2014. The results show that the direct and indirect tax revenue elasticity of Khuzestan province is 1.09 and 2.77 respectively, and the elasticity of total tax revenue is 1.34. In addition, as for the direct tax, the tax elasticity of wealth and real estate is greater than the tax elasticity of businesses and corporations. The findings also indicate that the tax capacity of the province's businesses has a positive and significant relationship with the value-added of the restaurant and hotel sector as well as per capita income. Furthermore, the relationship between corporate tax capacity and value-added services is positive and significant. Likewise, the relationship between the tax capacity of other direct taxes (wealth and real estate) with real value-added and economic growth is positive and significant, and the relationship between the tax capacity of indirect taxes with private consumption expenditures and value-added of the mining sector is positive and significant.

Keywords: Tax Capacity; Income Elasticity; Direct Tax Revenues; Indirect Tax Revenues; SUR Method. (search for similar items in EconPapers)
JEL-codes: H21 H26 H71 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:auv:jipbud:v:24:y:2020:i:4:p:97-124

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