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Short and long run income elasticity of gambling tax bases: evidence from Italy

Enrico di Bella, Luca Gandullia () and Lucia Leporatti ()

MPRA Paper from University Library of Munich, Germany

Abstract: In periods of economic recession and budget constraints, it becomes essential for the governments to understand which tax revenues are more likely to guarantee a stable or increasing amount of revenues able to support the provision of main public services without depending too much on variation in Gross Domestic Product (GDP). The aim of this paper is to analyze a particular source of tax revenues in Italy, namely gambling tax revenue split by game type (i.e. Lotto; Lotteries; Entertainment machines), in order to understand how tax bases react to changes in income, providing a measure of short run (variability over the business cycle) and long run (growth) income elasticity of different gambling tax revenues. Results show that gambling activities tend to be impressively reactive to variation in income in the long run, and, on the contrary, not particularly volatile in the short run.

Keywords: dynamic ordinary least squares; error correction models; excise taxation; gambling tax revenue; income elasticity of tax base. (search for similar items in EconPapers)
JEL-codes: C1 C10 H21 H27 H60 (search for similar items in EconPapers)
Date: 2014-09
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