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The Measurement of Tax Elasticity in India: A Time Series Approach

Hem Acharya

MPRA Paper from University Library of Munich, Germany

Abstract: Revenue generation is an important goal of tax reform. The built-in responsiveness of revenues to changes in income, tax elasticity, provides very critical information for tax policy formulation. This paper utilises a time series approach to empirically estimate tax elasticities for India for the period 1991-2010. Tax elasticities are computed for income, turnover, excise, import and total taxes for the post-reform period. The elasticity coefficients reveal a low responsiveness of taxes to income growth and the value being less than unity in most of the cases.

Keywords: Tax; Indian Tax; Tax Elasticity (search for similar items in EconPapers)
JEL-codes: H2 H20 H23 (search for similar items in EconPapers)
Date: 2011-01
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