Purpose

The purpose of this paper is to find out the factors contributing to major shifts in the growth of tax revenue through the estimation of structural breaks and analysis of major tax regimes. Recent contributions to optimal tax theory and empirical literature on the Laffer curve effect, based on elasticity of taxable income, challenge the settled understanding on the rate-revenue relationship. In this backdrop, the objective of the paper is to find out the relative significance of changes in tax rate, tax base and administrative reforms in affecting the growth of tax revenue in India. The paper considers tax data spanning a period of six and half decades for five major components of direct and indirect taxes (corporation, personal income, customs, excise and service) of the central government of India.

Design/methodology/approach

Unknown break point(s) – single and multiple – in the tax structure are identified by using the Quandt-Andrews and Bai-Perron econometric tests. These tests were conducted for two models of growth of taxes (tax revenue and tax-NDP ratio) estimated using semi-log functions. A simulation exercise was conducted to find out the robustness of the results by varying the trimming parameter and number of breaks. An analytical framework is used to understand the factors associated with these breaks.

Findings

There is more than one break identified for every tax component as per the results of Bai–Perron test. The simulation exercise suggests that estimated breakpoints are mostly robust. Economic growth, structural changes in the economy, simplification and rationalization of tax structure, tax competition, policies such as liberalization have contributed to the changing tax regimes. Results of this study suggest that high tax rates have not been, in particular, detrimental to achieving growth in revenue and factors other than changes in tax rates have been more prominent in bringing about the shifts.

Originality/value

This is, perhaps, the first paper exploring the multiple structural breaks in the fiscal variables in India. It offers an understanding of the changing regimes of central government taxes and the underlying factors for the same.

中文翻译：

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1950-1951年至2013-2014年印度中央政府税收的结构性突破

目的

本文的目的是通过结构性断裂的估计和主要税制的分析，找出导致税收收入增长发生重大变化的因素。基于应税收入的弹性，最近对拉弗曲线效应的最优税收理论和经验文献的贡献挑战了对税率-收入关系的既定认识。在这种背景下，本文的目的是找出税率，税基和行政改革的变化对影响印度税收增长的相对重要性。本文考虑了印度中央政府直接和间接税的五个主要部分（公司税，个人收入，关税，消费税和服务税）跨越六个半世纪的税收数据。

设计/方法/方法

通过使用Quandt-Andrews和Bai-Perron计量经济检验，可以确定税收结构中未知的折点（单点或多点）。这些测试是针对使用半对数函数估计的两种税收增长模型（税收和税收NDP比率）进行的。进行了模拟练习，以通过更改修整参数和中断次数来发现结果的鲁棒性。使用分析框架来了解与这些中断相关的因素。

发现

Bai-Perron检验的结果为每个税项确定了一个以上的中断。模拟练习表明，估计的断点大部分是可靠的。经济增长，经济结构变化，税收结构的简化和合理化，税收竞争，自由化等政策，都对不断变化的税收制度做出了贡献。这项研究的结果表明，高税率并没有特别不利于实现收入增长，而且税率变化以外的其他因素在带来这种变化方面更为突出。

创意/价值

也许这是第一篇探讨印度财政变量的多重结构性突破的论文。它提供了对不断变化的中央政府税制及其潜在因素的理解。