IDEAS home Printed from https://ideas.repec.org/a/kap/itaxpf/v12y2005i6p723-739.html
   My bibliography  Save this article

Commercial Policy Reform in Pakistan: Opening up the Economy under Revenue Constraints

Author

Listed:
  • Sajal Lahiri
  • Anjum Nasim

Abstract

We examine the potential for further reform of sales tax and tariffs on final goods and on intermediate inputs in Pakistan. Analysis is conducted at two levels. First, optimal taxes are computed under the assumption that tax revenue is exogenous and pays for a public good, and these are compared with their current levels. Second, we consider two piecemeal reform exercises to examine whether there is further scope for replacing the two tariffs by sales tax in a revenue-neutral way. Both approaches suggest that there is considerable scope for further reducing tariffs on final goods, but not on intermediate inputs. Copyright Springer Science + Business Media, Inc. 2005

Suggested Citation

  • Sajal Lahiri & Anjum Nasim, 2005. "Commercial Policy Reform in Pakistan: Opening up the Economy under Revenue Constraints," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(6), pages 723-739, November.
    • Handle: RePEc:kap:itaxpf:v:12:y:2005:i:6:p:723-739
    DOI: 10.1007/s10797-005-0486-8
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10797-005-0486-8
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10797-005-0486-8?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Keen, Michael & Lahiri, Sajal, 1998. "The comparison between destination and origin principles under imperfect competition," Journal of International Economics, Elsevier, vol. 45(2), pages 323-350, August.
    2. Morris Goldstein & Mohsin S. Khan, 2017. "Income and Price Effects in Foreign Trade," World Scientific Book Chapters, in: TRADE CURRENCIES AND FINANCE, chapter 1, pages 3-81, World Scientific Publishing Co. Pte. Ltd..
    3. Michael, Michael S. & Hatzipanayotou, Panos & Miller, Stephen M., 1993. "Integrated reforms of tariffs and consumption taxes," Journal of Public Economics, Elsevier, vol. 52(3), pages 417-428, October.
    4. Ahmad,Etisham & Stern,Nicholas, 1991. "The Theory and Practice of Tax Reform in Developing Countries," Cambridge Books, Cambridge University Press, number 9780521265638.
    5. Panagariya, Arvind & Shah, Shekhar & Mishra, Deepak, 2001. "Demand elasticities in international trade: are they really low?," Journal of Development Economics, Elsevier, vol. 64(2), pages 313-342, April.
    6. Baumol, William J & Bradford, David F, 1970. "Optimal Departures from Marginal Cost Pricing," American Economic Review, American Economic Association, vol. 60(3), pages 265-283, June.
    7. Buffie,Edward F., 2001. "Trade Policy in Developing Countries," Cambridge Books, Cambridge University Press, number 9780521004268.
    8. Dani Rodrik, 1992. "The Limits of Trade Policy Reform in Developing Countries," Journal of Economic Perspectives, American Economic Association, vol. 6(1), pages 87-105, Winter.
    9. Lahiri, Sajal & Raimondos, Pascalis, 1996. "Correcting Trade Distortions in a Small Open Economy," Review of International Economics, Wiley Blackwell, vol. 4(3), pages 287-299, October.
    10. Abe, Kenzo, 1992. "Tariff Reform in a Small Open Economy with Public Production," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(1), pages 209-222, February.
    11. Buffie,Edward F., 2001. "Trade Policy in Developing Countries," Cambridge Books, Cambridge University Press, number 9780521782234.
    12. Keen, Michael & Ligthart, Jenny E., 2002. "Coordinating tariff reduction and domestic tax reform," Journal of International Economics, Elsevier, vol. 56(2), pages 489-507, March.
    13. Wilson, John Douglas, 1991. "Optimal Public Good Provision with Limited Lump-Sum Taxation," American Economic Review, American Economic Association, vol. 81(1), pages 153-166, March.
    14. Lopez, Ramon E. & Rodrik, Dani, 1990. "Trade restrictions with imported intermediate inputs : When does the trade balance improve?," Journal of Development Economics, Elsevier, vol. 34(1-2), pages 329-338, November.
    15. Lloyd, P. J., 1974. "A more general theory of price distortions in open economies," Journal of International Economics, Elsevier, vol. 4(4), pages 365-386, November.
    16. Fullerton, Don, 1991. "Reconciling Recent Estimates of the Marginal Welfare Cost of Taxation," American Economic Review, American Economic Association, vol. 81(1), pages 302-308, March.
    17. Lopez, Ramon & Panagariya, Arvind, 1992. "On the Theory of Piecemeal Tariff Reform: The Case of Pure Imported Intermediate Inputs," American Economic Review, American Economic Association, vol. 82(3), pages 615-625, June.
    18. Ballard, Charles L & Shoven, John B & Whalley, John, 1985. "General Equilibrium Computations of the Marginal Welfare Costs of Taxes in the United States," American Economic Review, American Economic Association, vol. 75(1), pages 128-138, March.
    19. Lahiri, Sajal & Nasim, Anjum & Ghani, Jawaid, 2000. "Optimal second-best tariffs on an intermediate input with particular reference to Pakistan," Journal of Development Economics, Elsevier, vol. 61(2), pages 393-416, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Amèvi Rocard Kouwoaye, 2019. "Trade tax reforms and poverty in developing countries: Why do some countries benefit and others lose?," WIDER Working Paper Series wp-2019-66, World Institute for Development Economic Research (UNU-WIDER).
    2. Saqib Jafarey & Sajal Lahiri, 2009. "Developing Country Borrowing From A Monopolistic Lender: Strategic Interactions And Endogenous Leadership," The Japanese Economic Review, Japanese Economic Association, vol. 60(2), pages 191-207, June.
    3. Michael S. Michael & Panos Hatzipanayotou, 2013. "Cooperative and Non-Cooperative Equilibrium Consumption Taxes in the Presence of Cross-Border Pollution," CESifo Working Paper Series 4501, CESifo.
    4. Panos Hatzipanayotou & Sajal Lahiri & Michael Michael, 2011. "Trade and domestic tax reforms in the presence of a public good and different neutrality conditions," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(3), pages 273-290, June.
    5. 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.
    6. Lahiri, Sajal & Nasim, Anjum, 2006. "Export-promotion under revenue constraints: The case of tariff-rebate on intermediate inputs in Pakistan," Journal of Asian Economics, Elsevier, vol. 17(2), pages 285-293, April.
    7. Michael S. Michael & Sajal Lahiri & Panos Hatzipanayotou, 2008. "Integrated Reforms of Indirect Taxes in the Presence of Pollution," CESifo Working Paper Series 2276, CESifo.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lahiri, Sajal & Nasim, Anjum & Ghani, Jawaid, 2000. "Optimal second-best tariffs on an intermediate input with particular reference to Pakistan," Journal of Development Economics, Elsevier, vol. 61(2), pages 393-416, April.
    2. Lahiri, Sajal & Nasim, Anjum, 2006. "Export-promotion under revenue constraints: The case of tariff-rebate on intermediate inputs in Pakistan," Journal of Asian Economics, Elsevier, vol. 17(2), pages 285-293, April.
    3. James E. Anderson & Arja Turunen-Red, 1999. "Trade Reform with a Government Budget Constraint," International Economic Association Series, in: John Piggott & Alan Woodland (ed.), International Trade Policy and the Pacific Rim, chapter 9, pages 217-244, Palgrave Macmillan.
    4. 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.
    5. Can Erbil, 2004. "Trade Taxes Are Expensive," International Trade 0409002, University Library of Munich, Germany.
    6. Panos Hatzipanayotou & Sajal Lahiri & Michael Michael, 2011. "Trade and domestic tax reforms in the presence of a public good and different neutrality conditions," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(3), pages 273-290, June.
    7. 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.
    8. Charles L. Ballard & Don Fullerton, 1992. "Distortionary Taxes and the Provision of Public Goods," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 117-131, Summer.
    9. ERBIL Can, 2010. "Trade Taxes Are Better ?!? Short Answer: No," EcoMod2003 330700048, EcoMod.
    10. Michael Michael & Panos Hatzipanayotou, 2013. "Pollution and reforms of domestic and trade taxes towards uniformity," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(5), pages 753-768, October.
    11. James E. Anderson, 2002. "Trade Reform Diagnostics with Many Households, Quotas, and Tariffs," Review of International Economics, Wiley Blackwell, vol. 10(2), pages 215-236, May.
    12. Liqun Liu, 2004. "The Marginal Cost of Funds and the Shadow Prices of Public Sector Inputs and Outputs," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(1), pages 17-29, January.
    13. Ahmad; K.; Chaudhary; A. R, 2016. "The Effect of Trade Liberalization on Tax Structure of Pakistan," South Asian Journal of Management Sciences (SAJMS), Iqra University, Iqra University, vol. 10(2), pages 39-55, Fall.
    14. Liqun Liu, 2006. "Combining Distributional Weights and the Marginal Cost of Funds," Public Finance Review, , vol. 34(1), pages 60-79, January.
    15. Michael S. Michael & Panos Hatzipanayotou, 2013. "Cooperative and Non-Cooperative Equilibrium Consumption Taxes in the Presence of Cross-Border Pollution," CESifo Working Paper Series 4501, CESifo.
    16. M. Shahe Emran & Joseph E. Stiglitz, 2004. "Price-neutral Tax Reform With an Informal Economy," Public Economics 0407010, University Library of Munich, Germany.
    17. Mujumdar, Sudesh, 2004. "Revenue implications of trade liberalization under imperfect competition," Economics Letters, Elsevier, vol. 82(1), pages 83-89, January.
    18. Boadway, Robin, 1999. "Le rôle de la théorie de l’optimum du second rang en économie publique," L'Actualité Economique, Société Canadienne de Science Economique, vol. 75(1), pages 29-65, mars-juin.
    19. Manoj Atolia, 2010. "Public Investment, Tax Evasion, And The Welfare Effects Of A Tariff Reform," Contemporary Economic Policy, Western Economic Association International, vol. 28(2), pages 219-239, April.
    20. Arijit Mukherjee & M. Emranul Haque, 2009. "Revenue-enhancing Trade Liberalization in Developing Countries," Economics Bulletin, AccessEcon, vol. 29(3), pages 2275-2281.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:itaxpf:v:12:y:2005:i:6:p:723-739. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.