On the Elasticity of Developing Country

On the Elasticity of Developing Country Tax Systems Parthasarathi Shome This paper is concerned with the buoyancy and elisticity of the tax systems of developing countries, with particular reference to Asia. It discusses the impediments to an automatic response of tax revenue to economic growth. The author first presents a framework for estimating the buoyancy and elasticity of taxes and then provides some estimates of these measures from selected Asian economies, ft is argued that there is some built-in inflexibility in raising the elasticity of a typical tax system. The author recommends some measures for improving elasticity of taxes.