Analysis of the elasticities of tax collection on El Salvador

Abstract

The main objective of this document is to quantify the elasticity of Gross Domestic Product (GDP) in relation to the tax structure of the Salvadoran economy. To fulfill the main objective, two econometric exercises were proposed: firstly, the elasticity of Gross Domestic Product in relation to the Value Added Tax and the Income Tax (ISR), which are the most important taxes within the tax structure, was calculated; secondly, the elasticity of tax revenues in relation to economic sectors (agriculture, industry, and services) was determined.