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The Built-In Flexibility of Income and Consumption Taxes in OECD Countries

The Built-In Flexibility of Income and Consumption Taxes in OECD Countries

Binhan Elif Yılmaz, Sinan Ataer
Copyright: © 2017 |Pages: 9
ISBN13: 9781522522454|ISBN10: 152252245X|EISBN13: 9781522522461
DOI: 10.4018/978-1-5225-2245-4.ch010
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MLA

Yılmaz, Binhan Elif, and Sinan Ataer. "The Built-In Flexibility of Income and Consumption Taxes in OECD Countries." Handbook of Research on Global Enterprise Operations and Opportunities, edited by Mehdi Khosrow-Pour, D.B.A., IGI Global, 2017, pp. 162-170. https://doi.org/10.4018/978-1-5225-2245-4.ch010

APA

Yılmaz, B. E. & Ataer, S. (2017). The Built-In Flexibility of Income and Consumption Taxes in OECD Countries. In M. Khosrow-Pour, D.B.A. (Ed.), Handbook of Research on Global Enterprise Operations and Opportunities (pp. 162-170). IGI Global. https://doi.org/10.4018/978-1-5225-2245-4.ch010

Chicago

Yılmaz, Binhan Elif, and Sinan Ataer. "The Built-In Flexibility of Income and Consumption Taxes in OECD Countries." In Handbook of Research on Global Enterprise Operations and Opportunities, edited by Mehdi Khosrow-Pour, D.B.A., 162-170. Hershey, PA: IGI Global, 2017. https://doi.org/10.4018/978-1-5225-2245-4.ch010

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Abstract

Compatible with a variety of cyclical fluctuations in fiscal policy, is the automatic stabilising fiscal policies. There is a need to calculate the income elasticity of tax for relieving the effects of cyclical fluctuations. Income elasticity of tax, that is tax revenue have relative change, the ratio of the relative change in national income. This ratio must be bigger than 1 to label a tax system as elastic. If this ratio is bigger than 1, this situation also show the tax system has an automatic stabilizing feature. By that way, without any changes in tax structure, tax revenues increase in the deflation times and decrease in the inflation times. The automatically compensatory movement of tax revenues, generally referred to as “built-in flexibility”, has received increasing attention. The aim of this study is examining the existence of automatic stabilizers in the OECD countries by evaluating the income elasticity of income and consumption taxes and by making cross-countries comparatives.

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