Abstract
Abstract
We provide new empirical evidence to the existing literature on tax buoyancy in the Indian tax system. We explore the relation between gross tax revenue (GTR) and gross domestic product (GDP) at constant and current market prices of India for the period 1950-51 to 2021-22. We conduct a structural break analysis to analyse the GTR-GDP relationship in pre- and post-liberalization era namely 1951-1991 to 1992-2022. We found that GTR to GDP ratio is increasing at a constant rate with the increase in GDP at current and constant market price during pre-tax reform period. We demonstrated that the ratio of GTR to GDP is increasing with the increase in gross domestic product at constant market price during post-tax reform period and overall period (1950-51 to 2021-22). Our study concludes that the tax system performs poorly in mobilizing revenue and the tax revenue of India is relatively low by international standards.
Publisher
Research Square Platform LLC
Reference67 articles.
1. Tax policy for economic recovery and growth;Arnold JM;The economic journal,2011
2. Schwellnus, C., & Arnold, J. M. (2008). Do Corporate Taxes Reduce Productivity and Investment at the Firm Level?: Cross-Country Evidence from the Amadeus Dataset. OECD Economics Department Working Papers, No. 641, OECD Publishing, Paris, https://doi.org/10.1787/236246774048.
3. Another look at tax policy and state economic growth: The long-run and short-run of it;Atems B;Economics Letters,2015
4. Macroeconomic effects from government purchases and taxes;Barro RJ;The Quarterly Journal of Economics,2011
5. Belinga, V., Benedek, M. D., De Mooij, R. A., & Norregaard, M. J. (2014). Tax buoyancy in OECD countries. IMF Working Paper WP/14/110, Washington.