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Estimating Ireland’s Tax Elasticities: a Policy-Adjusted Approach

Niall Conroy

The Economic and Social Review, 2020, vol. 51, issue 2, 241-274

Abstract: This paper estimates tax elasticities for Ireland. We compile a new dataset on tax policy changes in Ireland. This allows us to use policy-adjusted revenue when estimating tax elasticities. This gives us a cleaner estimate of the relationship between government revenue and its economic drivers. We find that income tax elasticity estimates are significantly above one when policy-adjusted revenue is used, as opposed to significantly below one when unadjusted revenue is used. This highlights the importance of using policy-adjusted revenue when estimating elasticities. We also estimate elasticities of Pay Related Social Insurance and Value-Added Tax, which have previously received little attention in the Irish literature.

Keywords: tax policy; policy-adjusted revenue; Ireland (search for similar items in EconPapers)
Date: 2020
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Handle: RePEc:eso:journl:v:51:y:2020:i:2:p:241-274