Revenue and the fiscal impact of liberalization : the case of Niger
AbstractUsing data collected during several missions, the author finds that the principal reasons for low revenue mobilization are (1) the adverse fiscal impact of trade liberalization, (2) the defiscalization of agriculture in the 1970s, (3) the collapse of the uranium boom in the 1980s, and (4) the poor record of the VAT in mobilizing revenue. The large reduction in tariffs during the 1980s and 1990s in the context of structural adjustment programs and West African regional integration initiatives had adverse effects on trade tax revenue during the period 1980–2003. But higher import levels after 1994 succeeded in partially mitigating the revenue losses. The experience of Niger shows that without accompanying macroeconomic policies, parallel improvements in tax and customs administration, and success in mobilizing domestic taxes, most notably the VAT, trade reform can have adverse fiscal consequences. Using a SMART model partial equilibrium analysis developed by UNCTAD for researchers and negotiators at multilateral trade rounds, the author simulated three different tariff shocks to test the fiscal and trade implications of additional trade liberalization in Niger. First, the preferred tariff regime in terms of overall fiscal and job creation impact was the harmonized Swiss formula in contrast to a 10 and 15 percent uniform tariff. Second, a possible Regional Economic Partnership Agreement (REPA) between the European Union and l'Union Economique et Monetaire Ouest-Africaine (UEMOA) by 2015 that would abolish duties on EU imports to the UEMOA countries would have negative fiscal effects on Niger of more than 1 percent of GDP, positive effects on trade creation of about 1.5 percent of GDP, and ambiguous effects on local industry. While there will be some welfare gains for consumers and importers from lower import tariffs and the possibility of trade creation, the fiscal losses and adjustment costs would be significant, particularly in the machinery and transport sectors. Third, there are asymmetric gains and losses from regional integration and tariff changes, and a 10 percent uniform tariff would have the greatest impact on Benin and Senegal and some impact on Niger and Togo. In sum, further trade liberalization in Niger will have significant fiscal costs, partially offset by trade creation through increased imports.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 3500.
Date of creation: 01 Feb 2005
Date of revision:
Public Sector Economics&Finance; Economic Theory&Research; Trade Policy; Environmental Economics&Policies; Export Competitiveness; Trade and Regional Integration;
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Francisco Rodriguez & Dani Rodrik, 1999.
"Trade Policy and Economic Growth: a Skeptic's Guide to the Cross-National Evidence,"
9912, Economic Research Forum, revised Apr 1999.
- Francisco Rodriguez & Dani Rodrik, 2001. "Trade Policy and Economic Growth: A Skeptic's Guide to the Cross-National Evidence," NBER Chapters, in: NBER Macroeconomics Annual 2000, Volume 15, pages 261-338 National Bureau of Economic Research, Inc.
- Rodríguez, Francisco & Rodrik, Dani, 1999. "Trade Policy and Economic Growth: A Sceptic's Guide to the Cross-National Evidence," CEPR Discussion Papers 2143, C.E.P.R. Discussion Papers.
- Cadot, Olivier & de Melo, Jaime & Olarreaga, Marcelo, 1999. "Asymmetric Regionalism in Sub-Saharan Africa: Where Do We Stand?," CEPR Discussion Papers 2299, C.E.P.R. Discussion Papers.
- Schiff, Maurice, 2002. "Regional integration and development in small states," Policy Research Working Paper Series 2797, The World Bank.
- Reint Gropp & Liam P. Ebrill & Janet Gale Stotsky, 1999. "Revenue Implications of Trade Liberalization," IMF Occasional Papers 180, International Monetary Fund.
- Gatti, Roberta, 1999. "Corruption and trade tariffs, or a case for uniform tariffs," Policy Research Working Paper Series 2216, The World Bank.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).
If references are entirely missing, you can add them using this form.