Coordinating tariff reduction and domestic tax reform

A key obstacle to fundamental tariff reform in many countries is the revenue loss that it ultimately implies. This paper establishes and explores a simple and practicable strategy for realizing the efficiency gains from tariff reform without reducing public revenue, showing that for a small economy...

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Bibliographic Details
Published inJournal of international economics Vol. 56; no. 2; pp. 489 - 507
Main Authors Keen, Michael, Ligthart, Jenny E.
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.03.2002
Elsevier
Elsevier Sequoia S.A
SeriesJournal of International Economics
Subjects
Consumption
Economic models
Export taxes
Imperfect competition
Intermediate inputs
International economics
Statistical analysis
Studies
Tariff reform
Tariffs
Tax reform
Use taxes
Tariff reform
Intermediate inputs
F12
H20
Imperfect competition
F13
Tax reform
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Summary:A key obstacle to fundamental tariff reform in many countries is the revenue loss that it ultimately implies. This paper establishes and explores a simple and practicable strategy for realizing the efficiency gains from tariff reform without reducing public revenue, showing that for a small economy a cut in import duties (respectively, export taxes) combined with a point-for-point increase in domestic consumption taxes (production taxes) increases both welfare and public revenue. Increasingly stringent conditions are required, however, to ensure unambiguously beneficial outcomes from this reform strategy when allowance is made for such important features of reality as non-tradeable final goods and tradeable intermediate inputs.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0022-1996
1873-0353
DOI:10.1016/S0022-1996(01)00123-4