Revenue Elasticity of the Main Federal Taxes in Mexico

Felipe J. Fonseca ^[1] ; Daniel Ventosa Santaulària ^[2]
1. [1] Universidad de Guadalajara
  
  Universidad de Guadalajara
  
  México
2. [2] Universidad de Guajuanato
Localización: Latin American Journal of Economics: formerly Cuadernos de Economía, ISSN-e 0719-0433, Vol. 48, Nº. 1, 2011, págs. 89-111
Idioma: inglés
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Resumen
- An inelastic tax system increases the uncertainty associated with tax revenue collection. This results in continuous short-term adjustments to maintain the stability of tax collection. In this paper, we estimate the revenue elasticity of the principal taxes in Mexico, finding a much greater elasticity than that found in previous studies. A cointegration model between the revenue and taxes is used which satisfies strong exogeneity, providing a basis for congruent and reliable projections. Using this model, the tax revenue projected for 2011 is much lower than the estimates prepared by Mexico’s federal government.