Investigating the Iranian Tax System efficiency during 1980-2015: Focusing Tax Buoyancy and Elasticity indexes

The main purpose of this article is to evaluate Iran`s tax system efficiency through tax elasticity and buoyancy indexes. In doing so, buoyancy was estimated using income and tax basis data for various taxes during 1980-2015 through ARDL and ECM model and then, tax elasticity was estimated through tax policy control. Eventually, buoyancy estimation sensitivity was evaluated relative inflation and business cycles. Results suggest that in long term buoyancy and elasticity for various taxes are almost equal. But in short terms, elasticity is greater than buoyancy. According to this fact, tax policies do not play a significant role in tax income increment, and tax income increases due to tax basis growth. Also, inflation only affects buoyancy rate in short terms, and long term buoyancy is independent from the inflation changes. Additionally, direct taxes are not flexible in terms of business cycles, and tax is merely showing a cycle compatible behavior towards commodities and services.