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Political and Public Finance Motives for Tariffs

Michael Hoffman ()

International Trade from University Library of Munich, Germany

Abstract: Governments face many constraints when making taxation decisions, including revenue needs, political objectives, and administrative capacities. Tariffs have an appealing combination of features for politicians: they provide a stream of revenue that is easy to collect, as well as satisfying political objectives in import-competing industries. This paper describes the tax structure governments choose when they are not purely benevolent. In the model the government must finance a stream of public expenditures while simultaneously seeking campaign contributions to maximize political support. The predictions of the model are consistent with observed taxation decisions in developing and industrialized countries.

Keywords: tariffs; political economy; development; tax regimes (search for similar items in EconPapers)
JEL-codes: F1 F2 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pol
Date: 2005-10-28
Note: Type of Document - pdf; pages: 34
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