PERSONAL INCOME TAX ELASTICITY IN TURKEY: 1975-2005

Abstract The estimation of tax elasticity; the response of tax revenues to changes in income, is important for at least three reasons: i) formulating government budgets and monitoring tax collections (Sen, 2002), ii) the specification of tax functions, iii) the automatic stabilizing properties of the tax system and the public sector deficit Among the various approaches to tax elasticity calculation in literature , the most famous approach is Tanzi's Method due to its simplicity and the consensus about its correctness of elasticity estimates. Johansen cointegration tests for the perio