Estimation of Various tax Elasticities in Iran: Quantile Regression Approach

Tax is one of the determining variables of financial and distribution policies in the economy, Therefore, knowing and understanding the sensitivity of different sources of tax income to changes in economic growth plays an important role in determining the optimal rate of various types of tax bases. Taxes can make a significant contribution to improving the stability of government revenues and implementing policies to improve income distribution, Therefore, recognizing the effect of economic growth as one of the economic capacities has an important role in determining taxes. In this regard, this paper is done using the statistical evidence of Iran over 1981-2019 and using the quantile regression approach to estimate the asymmetric elasticity of tax to economic growth. The results show that there is a kind of asymmetry in tax elasticities and in high tax quantiles, the elasticity value is greater than one and this indicates the financial stability of government revenues in high quantiles. In addition, the low tax elasticity in the tax on goods and services, companies and imports indicates the low financial stability of the government in this type of taxes. Therefore, focusing on increasing the share of taxes with higher elasticity is the most important proposed policy for the government in order to increase revenues.