Trade protection and tax evasion: evidence from Kenya, Mauritius and Nigeria
We examine the effect of trade protection rates on evasion in three African countries Kenya, Mauritius and Nigeria. In capturing the effect of trade protection on tariff evasion, we use a much improved measure of trade protection from MacMAP 2001 and 2004. For two of these countries, the MacMAP dataset allows the novelty of using variation in trade protection across product, time and trading partners leading to significantly refined estimates of evasion elasticity relative to existing studies on tariff evasion. We find a robust evidence for positive elasticity of evasion with respect to tariffs in Kenya and Nigeria with relatively weaker evidence for Mauritius. Our results match the rankings of countries in institutional quality (in terms of the Corruption Perception Index). Greater responsiveness of evasion to the level of tariffs is established in Nigeria (comparatively weak institutional quality) vis-Ã -vis Kenya, and in Kenya vis-Ã -vis Mauritius (comparatively good institutional quality). This pattern is preserved even when focusing on same set of trading partners and same set of imported products for the three countries. This result is robust to controlling for protection on related products (that creates incentives/ opportunities for evasion) and also for degree of differentiation of the product and some other characteristics that could determine the ease of detection of evasion).
|Date of creation:||Jun 2009|
|Date of revision:||Jun 2009|
|Contact details of provider:|| Postal: Avenue du Doyen Poplawski, 64000 PAU|
Phone: 33 (0)5 59 40 80 01
Fax: 33 (0)5 59 40 80 10
Web page: http://catt.univ-pau.fr
More information through EDIRC
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.:
- 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 S. & Narciso, Gaia, 2007. "Differentiated products and evasion of import tariffs," Policy Research Working Paper Series 4123, The World Bank.
- Javorcik, Beata & Narciso, Gaia, 2008. "Differentiated Products and Evasion of Import Tariffs," CEPR Discussion Papers 6804, C.E.P.R. Discussion Papers.
- Zouhon-Bi, Simplice G. & Nielsen, Lynge, 2007. "The Economic Community of West African States : fiscal revenue implications of the prospective economic partnership agreement with the European Union," Policy Research Working Paper Series 4266, The World Bank.
- Levin, Jörgen & Widell, Lars M., 2014. "Tax evasion in Kenya and Tanzania: Evidence from missing imports," Economic Modelling, Elsevier, vol. 39(C), pages 151-162.
- Levin, Jörgen & Widell, Lars, 2007. "Tax Evasion in Kenya and Tanzania:Evidence from Missing Imports," Working Papers 2007:8, Örebro University, School of Business.
- Rauch, James E., 1999. "Networks versus markets in international trade," Journal of International Economics, Elsevier, vol. 48(1), pages 7-35, June.