Trade liberalisation and tax revenue mobilisation in ECOWAS countries
DOI:
https://doi.org/10.18559/rielf.2024.2.2031Keywords:
tax revenues, trade liberalisation, panel data, ECOWASAbstract
Purpose: The purpose of this article is to analyse the impact of trade liberalisation on tax revenues in the countries of the Economic Community of West African States (ECOWAS).
Design/methodology/approach: The econometric analysis is based on panel data estimated using the fixed effects method and covers the period from 1990 to 2016.
Findings: The findings show that the effect of trade liberalisation on tax revenues is sensitive to the measure used. Trade liberalisation measured by average tariff rates has a positive and significant effect on total tax revenue and domestic tax revenue, while a negative and statistically significant relationship is found between tariff reductions and tax revenue from international transactions. Furthermore, when trade liberalisation is captured by the degree of trade openness, the effect is positive and significant for all categories of tax revenue.
Originality/value: It is in the interest of the governments of the various countries in the zone to promote lower tariffs and greater openness to international trade in order to increase the mobilisation of tax revenues. However, this trade liberalisation must be accompanied by appropriate macroeconomic policies to guarantee a stable economic environment and good governance to ensure the credibility of the policies implemented.
JEL Classification
Panel Data Models • Spatio-temporal Models (C23)
Trade Policy • International Trade Organizations (F13)
Taxation, Subsidies, and Revenue (H2)
Africa • Oceania (N77)
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