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| Juan Ramón Hernández, Daniel Ventosa-Santaulària and Brian Roque |
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| ''Income elasticity of the main taxes in Mexico and fiscal loss during the COVID-19 pandemic'' |
| ( 2025, Vol. 45 No.1 ) |
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| We estimate the income elasticity of Mexico's value-added, income and total taxes. Our findings reveal that the elasticity of these taxes is greater than one, indicating a responsive tax system to economic fluctuations. These results confirm the countercyclycal role of the tax system and underscore the growing importance of non-oil tax revenue in maintaining fiscal stability. A counterfactual analysis to assess the revenue losses attributable to the COVID-19 pandemic, offers insights on the resilience of Mexico's tax system to economic shocks. |
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| Keywords: Income elasticity of taxes, Mexico, Emerging Economy, Covid-19 pandemic, ARDL, cointegration |
JEL: H2 - Taxation, Subsidies, and Revenue: General
E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General |
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| Manuscript Received : Dec 06 2024 | | Manuscript Accepted : Mar 30 2025 |
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