Political and Public Finance Motives for Tariffs
AbstractGovernments face many constraints when making taxation decisions, including revenue needs, political objectives, and administrative capacities. Tariffs have an appealing combination of features for politicians: they provide a stream of revenue that is easy to collect, as well as satisfying political objectives in import-competing industries. This paper describes the tax structure governments choose when they are not purely benevolent. In the model the government must finance a stream of public expenditures while simultaneously seeking campaign contributions to maximize political support. The predictions of the model are consistent with observed taxation decisions in developing and industrialized countries.
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Bibliographic InfoPaper provided by EconWPA in its series International Trade with number 0510016.
Length: 34 pages
Date of creation: 28 Oct 2005
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tariffs; political economy; development; tax regimes;
Find related papers by JEL classification:
- F1 - International Economics - - Trade
- F2 - International Economics - - International Factor Movements and International Business
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