Appendix 4 Elasticities of Social Security Contributions A similar analysis as the one in Section 6 for CIT, PIT, VAT, and total tax revenue is conducted for SSC in Argentina, Brazil, and Peru using quarterly data. In Argentina and Brazil, SSC include both pensions and health care contributions, whereas in Peru SSC include pensions contributions only. Sample periods are 1996Q1 to 2010Q4 in Argentina and Brazil, and 1999Q3 to 2010Q4 in Peru. Table A4.1 presents the adjustments made to the SSC series to filter out all policy-induced changes in revenue. Table A4.1. Adjustments in SSC in Argentina, Brazil, and Peru Argentina
Adjustment in 2002Q1 for decrease in rate from 35 percent to 29 percent Adjustment from 2002Q2 for increase in rate from 29 percent to 30 percent Adjustment in 2003Q2 for increase in rate from 30 percent to 32 percent Adjustment in 2003Q3 for increase in rate from 32 percent to 34 percent Adjustment from 2003Q4 for increase in rate from 34 percent to 36 percent Brazil No adjustment as rate of 28 percent remained constant during the whole period Peru Adjustments according to changes in the weighted average rate Weights given by the relative importance of the contributions collected from the private system and from the public system Source: Authors’ elaboration based on official information and IDB database.
Table A4.2 shows long-run and short-run elasticity estimations of SSC from equations (6) and (7). In all three countries, long-run elasticities are statistically significant and are also statistically different from 1. These results are consistent with those found for total taxes, CIT, PIT, and VAT shown in Table 10, confirming the highly elastic tax systems in these three countries in the long run. Regarding short-run elasticities, only Argentina exhibits statistical significance. In this country, the estimated short-run elasticity
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