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The income elasticity of tax revenue: estimates for income and consumption taxes in the United Kingdom
Author(s) -
Creedy John,
Gemmell Norman
Publication year - 2004
Publication title -
fiscal studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.63
H-Index - 40
eISSN - 1475-5890
pISSN - 0143-5671
DOI - 10.1111/j.1475-5890.2004.tb00096.x
Subject(s) - economics , income elasticity of demand , revenue , consumption (sociology) , elasticity (physics) , adjusted gross income , tax revenue , gross income , econometrics , permanent income hypothesis , income tax , aggregate income , labour economics , state income tax , macroeconomics , public economics , income distribution , tax reform , finance , mathematical analysis , social science , materials science , mathematics , inequality , sociology , market liquidity , composite material
This paper provides estimates of individual and aggregate revenue elasticities of income and consumption taxes in the UK over the period 1989–2000. It shows how budgetary changes, including changes to income‐related deductions, have substantially affected income elasticities. The estimates of consumption tax revenue elasticities show that changes in consumption patterns over time are important. A merit of the approach used here is that elasticity estimates can be calculated readily from official published sources.