Empirical Verification of Laffer’s Curve in the Colombian Economy between 1980 and 2005

Abstract

Tributary reforms carried out in Colombia have aimed at increasing tributary incomes to guarantee the balance of short and medium-term public finances. Though such reforms succeeded in increasing tributary incomes, their effects were mainly transitory leading to the implementation of new reforms. Based on Laffer’s curve, this paper presents empirically that regardless the increase of domestic taxes in Colombia, tax collection has decreased. This paper also attempts to prove that Colombia generates lower incomes in spite of today’s current tax collection and behavior.