Valued-added tax revenues in Mexico

An empirical analysis

José A. Tijerina-Guajardo, Jose Pagan

Research output: Contribution to journalArticle

Abstract

This article analyzes the effect of changes in the valued-added tax (VAT) rate on real VAT revenue in Mexico. Recently, there has been a heated debate on the optimal VAT system and the potential economic impact of a reduction in the VAT rate in the country. The results from estimating a VAT revenue model suggest that there seems to be a positive relationship between VAT revenue and the tax rate around the actual VAT rate, contrary to the assertion that there is a Laffer curve for the VAT in Mexico. A 1 percentage point change in the VAT rate results in a 2.4% change in real VAT revenues. Leaving aside other fiscal reform considerations, the results appear to be robust to alternative empirical specifications.

Original languageEnglish (US)
Pages (from-to)561-575
Number of pages15
JournalPublic Finance Review
Volume28
Issue number6
DOIs
StatePublished - 2000

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tax revenue
taxes
Mexico
tax system
economic impact
Empirical analysis
Tax revenues
Tax rate
reform

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Public Administration

Cite this

Valued-added tax revenues in Mexico : An empirical analysis. / Tijerina-Guajardo, José A.; Pagan, Jose.

In: Public Finance Review, Vol. 28, No. 6, 2000, p. 561-575.

Research output: Contribution to journalArticle

Tijerina-Guajardo, José A. ; Pagan, Jose. / Valued-added tax revenues in Mexico : An empirical analysis. In: Public Finance Review. 2000 ; Vol. 28, No. 6. pp. 561-575.
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