This paper estimates the elasticity of tax revenue for the years 1999-2014 in Korea, using the fully modified ordinary least squares(FMOLS) method. The tax revenue dataset is adjusted for the effects of tax reforms by using the proportional adjustment...
This paper estimates the elasticity of tax revenue for the years 1999-2014 in Korea, using the fully modified ordinary least squares(FMOLS) method. The tax revenue dataset is adjusted for the effects of tax reforms by using the proportional adjustment method. Our findings reveal that overall tax elasticity decreased from 0.95 for 1999-2006 to 0.69 for 2007-2014. This decrease implies that the authority must seek additional tax revenue by introducing discretionary changes due to tax policies.