Verification of the Laffer curve, case of Ecuador 2016 – 2017

Abstract

It is evident the great contribution that the tax collection has had in the General Budget of the Ecuadorian State in the last years; It is for this reason that the national monetary authorities have constantly introduced reforms to the legal framework with the aim of optimizing this collection, so that it covers the state planning and is part of the growth dynamics of the national economy. This paper examines the relationship between the tax burden and tax revenue in our country in 2016 and 2017, through the empirical recognition of the validity of the theoretical principles of the Laffer curve, for which statistical analysis was applied to the data series of both GDP, population and levels of tax collection obtained in the databases of the corresponding state entities, evidencing, on the one hand, the growth of the fiscal pressure in the period studied, and compliance with the parameters that establishes the theoretical model, although the low significance of its coefficients is noted; finally, the rate that maximizes the tax revenue under the specifications of the proposed econometric model is established.