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Institutions and Customs Duty Evasion

Author

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  • Sébastien Jean
  • Cristina Mitaritonna
  • Antoine Vatan

Abstract

Tariff receipts are important for many countries but their collection is often problematic. To analyze why and to what extent this occurs we first model customs duty evasion as an interaction between customs officers considered to be corruptible law enforcers, and importing firms. In this context, higher tariffs generally lead to greater customs duty evasion but their marginal impact is decreasing, and may turn negative above a given threshold if customs officers adapt their inspection effort endogenously. While transparency (the probability of effective control) always limits evasion, we show that ease of enforcement (e.g. ease of establishing the shipment`s true value) matters only if customs officers do not collude with importers. Our empirical analysis spans 55 importing countries over the period 2001-2010 and confirms our predictions. This lends support to the assumptions of endogenous inspection effort and widespread collusion. World Trade Organization membership is found also to limit the extent of duty evasion.

Suggested Citation

  • Sébastien Jean & Cristina Mitaritonna & Antoine Vatan, 2018. "Institutions and Customs Duty Evasion," Working Papers 2018-24, CEPII research center.
  • Handle: RePEc:cii:cepidt:2018-24
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    References listed on IDEAS

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    Cited by:

    1. Cyril Chalendard & Alice Duhaut & Ana Margarida Fernandes & Aaditya Mattoo & Gael Raballand & Bob Rijkers, 2020. "Does Better Information Curb Customs Fraud?," CESifo Working Paper Series 8371, CESifo.
    2. Fabien Candau & G Guepie & R Kouakou, 2021. "In Gravity no Veritas: Dubious Trade Elasticity and Weak Effects of Regional Trade Agreements in Africa," Working Papers hal-03257448, HAL.

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    More about this item

    Keywords

    Tax Evasion; Customs Duty; Institutions; International Trade;
    All these keywords.

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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