Tax Evasion in Kenya and Tanzania:Evidence from Missing Imports
AbstractIn this paper we estimate the amount of tax evasion in customs authorities in both Kenya and Tanzania by calculating measurement errors in reported trade flows between the two countries and correlate those errors with tax rates. We find that the measurement error is correlated with the tax rates in both Kenya and Tanzania. According to the Transparency International Corruption Perceptions Index, Kenya is more corrupt than Tanzania, but we find that the coefficient on tax is higher in Tanzania compared to Kenya implying that tax evasion on imported goods is higher in Tanzania compared to the Kenya. We also introduced a third country into our analysis, the United Kingdom, and tax evasion seems to be more severe in trade flows between Kenya and Tanzania compared to trade flows between the United Kingdom and Kenya/Tanzania. Finally we also find that the tax evasion coefficient is lower in the Kenya-United Kingdom case compared to the Tanzanian-United Kingdom case which supports our previous finding that tax evasion is more severe in the Tanzanian customs authority.
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Bibliographic InfoPaper provided by Örebro University, School of Business in its series Working Papers with number 2007:8.
Length: 33 pages
Date of creation: 01 Nov 2007
Date of revision:
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Postal: Örebro University School of Business, SE - 701 82 ÖREBRO, Sweden
Phone: 019-30 30 00
Fax: 019-33 25 46
Web page: http://www.oru.se/Institutioner/Handelshogskolan-vid-Orebro-universitet/
More information through EDIRC
Tax evasion; corruption; trade; Kenya; Tanzania;
Other versions of this item:
- Levin, Jörgen & Widell, Lars M., 2014. "Tax evasion in Kenya and Tanzania: Evidence from missing imports," Economic Modelling, Elsevier, vol. 39(C), pages 151-162.
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
This paper has been announced in the following NEP Reports:
- NEP-AFR-2007-12-15 (Africa)
- NEP-ALL-2007-12-15 (All new papers)
- NEP-DEV-2007-12-15 (Development)
- NEP-INT-2007-12-15 (International Trade)
- NEP-PBE-2007-12-15 (Public Economics)
- NEP-PUB-2007-12-15 (Public Finance)
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