Tax Revenue and (or?) Trade Liberalization

By Thomas Baunsgaard, Michael Keen. Social Science Research Network, 2005

768 citations recorded by the source corpus.

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.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/539d2c913ea74969a791a8a71c5ea51463fbc9a4

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Citations in the corpus

Resource Blessing, Revenue Curse? Domestic Revenue Effort in Resource-Rich Countries (2014, methodology): “The control variables are drawn from previous studies that analyzed the determinants of the tax ratio (Ghura, 1998) and tax effort (see, for example, Sen Gupta, 2007; Baunsgaard and Keen, 2010; Pessino and Fenochietto, 2010). In particular, a proxy for the development of the economy, measured as the”
The Political Economy of Taxation and Tax Reform in Developing Countries (2006, background): “Evidence presented by the IMF (Baunsgaard and Keen, 2005) have found that 19 In theory, the overall impact of VAT need not be regressive.”
Why Do Developing Countries Tax So Little (2014, background): “Clearly, tax shares Source: Draws on data from Mitchell (2007).”
Property Rights and EconomicDevelopment (2009, neutral): “V 0 ( ) + fpV 0 + (1 p)W 0g (21) W 0 + fpV 0 + (1 p)W 0g :”
Tax Composition and Growth: A Broad Cross-Country Perspective (2012, background): “…tax (VAT) and sales taxes also increase with income, yet differences across income groups are relatively less significant than say the PIT or SSC. Trade taxes significantly decrease with the level of development, a fact that has been noted elsewhere (e.g., IMF, 2011; Baunsgaard and Keen, 2010).”