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Political Connections and Tariff Evasion: Evidence from Tunisia

Bob Rijkers, Leila Baghdadi and Gaël Raballand ()

No 961, Working Papers from Economic Research Forum

Abstract: Are politically connected firms more likely to evade taxes? This paper presents evidence suggesting firms owned by President Ben Ali and his family were more prone to evading import tariffs. During Ben Ali’s reign, evasion gaps, defined as the difference between the value of exports to Tunisia reported by partner countries and the value of imports reported at Tunisian customs, were correlated with the import share of connected firms. This association was especially strong for goods subject to high tariffs, and driven by underreporting of unit prices, which diminished after the revolution. Consistent with these product-level patterns, unit prices reported by connected firms were lower than those reported by other firms, and declined faster with tariffs than those of other firms. Moreover, privatization to the Ben Ali family was associated with a reduction in reported unit prices, whereas privatization per se was not.

New Economics Papers: this item is included in nep-afr, nep-ara and nep-iue
Date: 2015-10, Revised 2015-10
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Published by The Economic Research Forum (ERF)

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Related works:
Journal Article: Political Connections and Tariff Evasion Evidence from Tunisia (2017) Downloads
Working Paper: Political connections and tariff evasion: evidence from Tunisia (2015) Downloads
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