IMF Working Papers

Coordinating Tariff Reduction and Domestic Tax Reform

By Michael Keen, Jenny E Ligthart

July 1, 1999

Download PDF

Preview Citation

Format: Chicago

Michael Keen, and Jenny E Ligthart. Coordinating Tariff Reduction and Domestic Tax Reform, (USA: International Monetary Fund, 1999) accessed November 21, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

A key obstacle to fundamental tariff reform in many developing countries is the revenue loss that it ultimately implies. This paper establishes a simple and practicable strategy for realizing the efficiency gains from tariff reform without reducing public revenues, showing that for a small open economy, a cut in tariffs combined with a point-for-point increase in domestic consumption taxes increases both welfare and public revenues. Increasingly stringent conditions are required, however, to ensure unambiguously beneficial outcomes from this reform strategy when allowance is made for such important features as nontradeable goods, intermediate inputs, and imperfect competition.

Subject: Consumer prices, Consumption, Consumption taxes, National accounts, Prices, Producer prices, Tariffs, Taxes

Keywords: Africa, Consumer prices, Consumption, Consumption taxes, Imperfect competition, Intermediate inputs, Producer prices, Production efficiency, Reducing tariff, Reform design, Reform literature, Reform of the kind, Revenue function, Tariff reduction, Tariff reform, Tariff revenue, Tariffs, Tax reform, Tax-tariff reform, WP

Publication Details

  • Pages:

    20

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 1999/093

  • Stock No:

    WPIEA0931999

  • ISBN:

    9781451851632

  • ISSN:

    1018-5941

You May Also Be Interested In...

Kiribati: Agricultural Subsidies for Copra: Improving Efficiency and Equity and Balancing Trade-offs

November 21, 2024

Managing Tax Incentives in Developing Countries

November 21, 2024

Quarterly Projection Model for the Bank of Ghana: Extensions and Applications

November 15, 2024

Libya: Technical Assistance Report-Redesign of Income Tax Forms

November 15, 2024