Coordinating Tariff Reduction and Domestic Tax Reform

Keen, Michael; Ligthart, Jenny E.

doi:10.5089/9781451851632.001

Cited by 34 publications

(34 citation statements)

References 17 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…However, since the inception of World Trade Organization (WTO) in 1995, both developed and developing countries have experienced a significant degree of liberalisation of their trade regimes, which has presumably led to a decline in international trade tax revenue and hence a fall in public revenue. A number of studies have reported empirical evidence or emphasised the public revenue losses associated with greater trade liberalisation (or trade openness) (Baunsgaard & Keen, ; Berg & Krueger, ; Bevan, ; Cagé & Gadenne, ; Castanheira, Nicodème, & Profeta, ; Crivelli, ; Greenaway & Milner, ; Hisali, ; Keen & Ligthart, ; Keen & Simone, ; Khattry & Rao, ; Longoni, ; Moller, ; Waglé, ).…”

Section: Introductionmentioning

confidence: 99%

Trade openness, tax reform and tax revenue in developing countries

Gnangnon

Brun

2019

World Economy

View full text Add to dashboard Cite

This article investigates empirically whether the effect of tax reform (involving the progressive replacement of trade tax revenue with domestic tax revenue) in developing countries' tax revenue performance (measured by tax revenue‐to‐GDP ratio) depends on the degree of trade openness of these countries. The analysis has used an unbalanced panel data set of 95 developing countries over the period 1981–2015 and the two‐system GMM approach. Results suggest that tax reform is positively and significantly associated with tax revenue performance in developing countries, with the magnitude of this positive effect increasing as countries experience a higher development level. Additionally, and more importantly, countries that further open up their economies to international trade enjoy a higher positive effect of tax reform on tax revenue than countries that experience a lower degree of trade openness. Therefore, these findings should help dissipate the concerns of policymakers in developing countries that greater openness to international trade would further erode their tax revenue, including by lowering their international trade tax revenue. In fact, the implementation of an appropriate tax reform in the context of greater trade openness would generate higher tax revenue, while concurrently allowing countries to reap the well‐known benefits of international trade.

show abstract

Section: Introductionmentioning

confidence: 99%

Trade openness, tax reform and tax revenue in developing countries

Gnangnon

Brun

2019

World Economy

View full text Add to dashboard Cite

show abstract

“…VAT is therefore less susceptible to evasion than a retail sales tax, for which collection occurs during the final stage of production. The recent empirical evidences point to a positive effect of VAT adoption on revenue performance in developing countries (Gordon & Nielsen, ; Auriol & Warlters, ; Michael et al ., ; Hatzipanayotou et al ., ; Abe, ; Keen & Ligthart, ; Keen & Lockwood, ).…”

Section: Introductionmentioning

confidence: 99%

Do International Remittances Affect the Level and the Volatility of Government Tax Revenues?

Ebeke

2013

J. Int. Dev.

View full text Add to dashboard Cite

This paper examines whether international remittance inflows expand fiscal space in receiving through their positive effects on the level and the stability of government tax revenues. It investigates whether these effects of remittances are conditional on the presence of a value added tax (VAT). Using a large sample of countries, and even after factoring in the endogeneity of remittances and the VAT adoption, this study highlights that remittance inflows increase the level and the stability of government tax revenue ratio in presence of a VAT. Copyright © 2013 John Wiley & Sons, Ltd.

show abstract

“…(), for instance, show theoretically that not only welfare but also revenues increase, as long as a uniform reduction in trade taxes is combined with increases in consumption taxes that keep consumer prices constant. Building further on these findings, Keen and Ligthart () prove that the same result is achieved under any tariff reduction, provided that the latter increases the value of domestic production at world prices. In the presence of a shadow economy however, the usefulness of a consumption‐based tax is undermined in Emran and Stiglitz (), who demonstrate that successful substitution between trade and consumption taxes may not occur when the size of hidden activities is high enough to leave part of the final consumption untaxed.…”

Section: Introductionmentioning

confidence: 89%

The Impact of the Shadow Economy on Indirect Tax Revenues

Vlachaki

2015

Economics & Politics

View full text Add to dashboard Cite

This paper examines empirically the impact of the shadow economy on indirect tax revenues in an unbalanced panel of 125 countries for the period 1990-2011. The same analysis is conducted excluding at first and then including international trade tax revenues in (total) indirect tax revenues, as a way to disentangle any impact of trade liberalization. In both cases, the results suggest that the size of the shadow economy increases the ratio of indirect tax revenues to GDP, as long as informality does not exceed a cutoff value. When the size of the shadow economy exceeds that level, any further increase affects indirect taxation negatively. The findings are robust to a number of sensitivity tests and when addressing the problem of potential endogeneity. The empirical evidence is in line with the predictions provided by the theoretical framework of the paper.

show abstract

Coordinating Tariff Reduction and Domestic Tax Reform

Cited by 34 publications

References 17 publications

Trade openness, tax reform and tax revenue in developing countries

Trade openness, tax reform and tax revenue in developing countries

Do International Remittances Affect the Level and the Volatility of Government Tax Revenues?

The Impact of the Shadow Economy on Indirect Tax Revenues

Contact Info

Product

Resources

About