Analysis of the elasticities of tax revenue in El Salvador

Abstract

The general 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 achieve this general objective, two econometric exercises were conducted: first, the elasticity of Gross Domestic Product was calculated in relation to Value Added Tax (VAT) and Income Tax (ISR), which are the most important taxes within the tax structure; second, the elasticity of tax revenues was determined in relation to the economic sectors (agriculture, industry, and services).