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The Target Rates of Tariff and Tax Reform

Author

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  • Abe, Kenzo

Abstract

This paper derives the target rates for the simultaneous reform of tariffs and commodity taxes in a small open economy with an endogenous public good. These target rates are independent of consumer preference for the public good but the reform increases welfare. As a special case, welfare is increased by the proportional reduction of all tariffs if it is accompanied by the uniform change of commodity taxes toward the ratio of government revenue to either private consumption or private production. The author also presents tariff and tax reforms that would lead the economy to the first-best if applied continuously. Copyright 1995 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Suggested Citation

  • Abe, Kenzo, 1995. "The Target Rates of Tariff and Tax Reform," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(4), pages 875-885, November.
  • Handle: RePEc:ier:iecrev:v:36:y:1995:i:4:p:875-85
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    Cited by:

    1. Michael S. Michael & Sajal Lahiri & Panos Hatzipanayotou, 2015. "Piecemeal Reform of Domestic Indirect Taxes toward Uniformity in the Presence of Pollution: with and without a Revenue Constraint," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(2), pages 174-195, April.
    2. Emran, M. Shahe, 2005. "Revenue-increasing and welfare-enhancing reform of taxes on exports," Journal of Development Economics, Elsevier, vol. 77(1), pages 277-292, June.
    3. repec:ajm:journl:v:10:y:2016:i:2:p:39-55 is not listed on IDEAS
    4. Joseph E. Stiglitz & M. Shahe Emran, 2004. "Price Neutral Tax reform With an Informal Economy," Econometric Society 2004 North American Summer Meetings 493, Econometric Society.
    5. Christian EBEKE & Hélène EHRHART, 2011. "Does VAT reduce the instability of tax revenues?," Working Papers 201124, CERDI.
    6. Takumi Naito & Kenzo Abe, 2008. "Welfare- and Revenue-Enhancing Tariff and Tax Reform under Imperfect Competition," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(6), pages 1085-1094, December.
    7. Hisali, Eria, 2012. "Trade policy reform and international trade tax revenue in Uganda," Economic Modelling, Elsevier, vol. 29(6), pages 2144-2154.
    8. Keiko Kubota, 2005. "Fiscal Constraints, Collection Costs, And Trade Policies," Economics and Politics, Wiley Blackwell, vol. 17, pages 129-150, March.
    9. Naito, Takumi, 2006. "Tariff and tax reform: Dynamic implications," Journal of International Economics, Elsevier, vol. 68(2), pages 504-517, March.
    10. Takarada, Yasuhiro, 2004. "Foreign aid, tariff revenue, and factor adjustment costs," Japan and the World Economy, Elsevier, vol. 16(2), pages 231-242, April.
    11. Emran, M. Shahe & Stiglitz, Joseph E., 2005. "On selective indirect tax reform in developing countries," Journal of Public Economics, Elsevier, vol. 89(4), pages 599-623, April.
    12. Naito, Takumi, 2006. "Growth, revenue, and welfare effects of tariff and tax reform: Win-win-win strategies," Journal of Public Economics, Elsevier, vol. 90(6-7), pages 1263-1280, August.
    13. Kenji Fujiwara, 2015. "Tax Principles and Tariff-Tax Reforms," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 71(3), pages 360-370, September.
    14. Akihiko Yanase, 2010. "Tariff and Environmental Tax Reforms in a Polluted Small Open Economy with Public Production," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 66(4), pages 333-349, December.

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