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Thus, tax elasticity, which is based on revenue changes after adjusting for discretionary effect, is a measure of the responsiveness of tax revenues to automatic changes in economic activity and tax administration. Tax elasticity is the product of two components: (1) the base elasticity which is the elasticity of the base with respect to aggregate income; and (2) the rate elasticity which is the elasticity of the tax yield with respect to the base...
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Tax elasticity is the product of two components: (1) the base elasticity which is the elasticity of the base with respect to aggregate income; and (2) the rate elasticity which is the elasticity of the tax yield with respect to the base. The change in tax revenues during a given period is the sum total of changes in economic activity and changes due to discretionary tax measures (Trinidad, 1981)...
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