VAT Elasticities on Imports as a Lever to Forecast Collection: Mexico 2010–2021

This chapter obtained the elasticities of VAT collection with respect to merchandise imports classified in the 99 chapters of the International Harmonized System 2010–2021. Evidence of an equilibrium relationship, in the long run, was found by cointegration in a VEC model. The results show that sixteen chapters explain 82% of the value of imports with different elasticities which allows identifying the sensitivity of VAT collection in generating income from imports. The chapters that stand out are machinery and electrical material; mechanical devices, boilers, and their parts; goods related to land transport and its parts, and mineral fuels and their products. The elasticities can be a lever that contributes to a better forecast of tax government revenues, specifically of the second source of income.