Policies, Enforcement, and Customs Evasion; Evidence from India
We examine the effect of tariff policies on evasion of customs duties, in the context of the trade reform in India of the 1990s. We exploit the variation in tariff rates across time and products to identify the evasion elasticity, namely, the effect of tariffs on evasion, and relate this elasticity to factors related to customs enforcement or the quality of customs institutions. We find a positive and robust effect of tariffs on import tax evasion. We then show that the evasion elasticity is influenced by certain product characteristics that determine how easy it is to detect evasion (with more differentiated products exhibiting a higher evasion elasticity). This evasion elasticity, which we broadly interpret as reflecting the quality of customs administration, has not improved over the 1990s. Finally, our results suggest that the effectiveness of customs in addressing evasion may be better in India than China, although China appears to be catching up over time.
|Date of creation:||01 Mar 2007|
|Contact details of provider:|| Postal: International Monetary Fund, Washington, DC USA|
Phone: (202) 623-7000
Fax: (202) 623-4661
Web page: http://www.imf.org/external/pubind.htm
More information through EDIRC
|Order Information:||Web: http://www.imf.org/external/pubs/pubs/ord_info.htm|
References listed on IDEAS
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.:
- Pritchett, Lant & Sethi, Geeta, 1994.
"Tariff Rates, Tariff Revenue, and Tariff Reform: Some New Facts,"
World Bank Economic Review,
World Bank Group, vol. 8(1), pages 1-16, January.
- Pritchett, Lant & Sethi, Geeta, 1993. "Tariff rates, tariff revenue, and tariff reform : some new facts," Policy Research Working Paper Series 1143, The World Bank.
- Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
- Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June.
- Petia Topalova, 2004.
"Trade Liberalization and Firm Productivity; The Case of India,"
IMF Working Papers
04/28, International Monetary Fund.
- Petia Topalova & Amit Khandelwal, 2011. "Trade Liberalization and Firm Productivity: The Case of India," The Review of Economics and Statistics, MIT Press, vol. 93(3), pages 995-1009, August.
- Javorcik, Beata S. & Narciso, Gaia, 2007.
"Differentiated products and evasion of import tariffs,"
Policy Research Working Paper Series
4123, The World Bank.
- Javorcik, Beata S. & Narciso, Gaia, 2008. "Differentiated products and evasion of import tariffs," Journal of International Economics, Elsevier, vol. 76(2), pages 208-222, December.
- Javorcik, Beata & Narciso, Gaia, 2008. "Differentiated Products and Evasion of Import Tariffs," CEPR Discussion Papers 6804, C.E.P.R. Discussion Papers.
- James E. Rauch, 1996.
"Networks versus Markets in International Trade,"
NBER Working Papers
5617, National Bureau of Economic Research, Inc.
- Joel Slemrod & Wojciech Kopczuk, 2000.
"The Optimal Elasticity of Taxable Income,"
NBER Working Papers
7922, National Bureau of Economic Research, Inc.
- Raymond Fisman & Shang-Jin Wei, 2001.
"Tax Rates and Tax Evasion: Evidence from "Missing Imports" in China,"
NBER Working Papers
8551, National Bureau of Economic Research, Inc.
- Raymond Fisman & Shang-Jin Wei, 2004. "Tax Rates and Tax Evasion: Evidence from "Missing Imports" in China," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 471-500, April.
- Fisman, Raymond & Wei, Shang-Jin, 2001. "Tax Rates and Tax Evasion: Evidence from 'Missing Imports' in China," CEPR Discussion Papers 3089, C.E.P.R. Discussion Papers.
When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:07/60. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jim Beardow)or (Hassan Zaidi)
If references are entirely missing, you can add them using this form.