The Effect of Economic Policies on the Tax Ratio in Trinidad and Tobago

Author(s): Saridakis, George; Sookram, Sandra (2005)

Created 01 Jan, 2005
Categories Working Papers
Views: 1976
We focus mainly on economic factors that may affect revenue available in Trinidad and Tobago and present cointegration test statistics for a second order VAR(2) based on JohansenÂ’s maximum likelihood approach. Our results suggest a positive relationship between level of income and the tax ratio and also that external debt and inflation impede the collection of taxes. Additionally, we found that the degree of openness exerts insignificant impact on the tax ratio. Our study recommends potential areas that may be targeted in order to raise tax revenues and which may also raise the consciousness that tax reform is a very integral subject matter.

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