Tax revenue and (or?) trade liberalization

Thomas Baunsgaard and Michael Keen

Journal of Public Economics, 2010, vol. 94, issue 9-10, 563-577

Abstract: With the public finances of many developing and emerging market countries still heavily dependent on trade tax revenues, further trade liberalization may be hindered unless they are able to develop alternative sources of revenue. Against a background of, and to inform, heightened theoretical controversy as to the appropriate balance between trade and other taxes (not least the VAT), this paper uses panel data for 117 countries over 32 years--cleaned for a variety of problems in standard data sources--to address a central question of fact: Have countries recovered from domestic taxes the revenues they have lost from past episodes of trade liberalization? For high income countries, the answer is clearly 'yes.' For middle income countries, there are robust signs of strong replacement both concurrently with the revenue loss and--essentially dollar-for-dollar--in the long run. Signs of significant recovery by low income countries are flimsier, however, and their experiences appear to have varied widely. The picture that emerges for low income countries is thus that replacement has been (and become) higher than previous studies have suggested, but sufficiently incomplete in many cases to give cause for concern.

Keywords: Tax; and; tariff; reform; Trade; liberalization; Taxation; and; development (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (216)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0047-2727(09)00147-9
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Tax Revenue and (or?) Trade Liberalization (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:94:y:2010:i:9-10:p:563-577

Access Statistics for this article

Journal of Public Economics is currently edited by R. Boadway and J. Poterba

More articles in Journal of Public Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().