Revenue-Increasing and Welfare-Enhancing Reform of Taxes of Exports
Posted: 25 Apr 2011
Date Written: April 21, 2011
The loss of revenue from a reduction in export taxes has been a concern for trade policy reform in many developing countries. We discuss a strategy for selective reform of taxes on exports that enhances welfare and increases revenue. The strategy involves a reduction in the export tax on a given commodity with an offsetting increase in production tax to keep the producer price unchanged. This strategy is especially promising for exportables with a net subsidy on domestic consumption due to high export taxes and low consumption taxes.
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