Wagle, Swarnim2012-03-192012-03-192011-12-01https://hdl.handle.net/10986/3689A revenue-neutral switch from trade taxes to domestic consumption taxes is fraught with implementation challenges in countries with a large informal sector. It is shown for a sample of low-income countries over 25 years that they have had a mixed record of offsetting reductions in trade tax revenue. The paper then analyzes the specific case of Nepal, using a unique data set compiled from unpublished customs records of imports, tariffs and all other taxes levied at the border. It estimates changes to revenue and domestic production associated with two sets of reforms: i) proportional tariff cuts coordinated with a strictly enforced value-added tax; and ii) proposed tariff cuts under a regional free trade agreement. It is shown that a revenue-neutral tax reform is conditional on the effectiveness with which domestic taxes are enforced. Furthermore, loss of revenue as a result of intra-regional free trade can be minimized through judicious use of Sensitive Lists that still cover substantially all the trade as required by Article XXIV of the GATT.CC BY 3.0 IGOACCOUNTINGADMINISTRATION OF JUSTICEAGRICULTUREAPPARELAPPLIED TARIFFAVERAGE TARIFFBONDBUDGET CONSTRAINTCAPACITY CONSTRAINTSCAPITAL GOODSCHECKSCLASSICAL ECONOMICSCOLLECTED TARIFFCOLLECTED TARIFFSCONSUMER GOODSCONSUMER PRICESCONSUMERSCOST OF COLLECTIONCUSTOMSCUSTOMS ADMINISTRATIONCUSTOMS AUTHORITIESCUSTOMS UNIONSDEFAULT CASEDEMAND ELASTICITIESDEMAND ELASTICITYDEVELOPED COUNTRIESDEVELOPING COUNTRIESDEVELOPMENT BANKDEVELOPMENT ECONOMICSDEVELOPMENT POLICYDOMESTIC CONSUMPTIONDOMESTIC INDUSTRIESDOMESTIC PRICEDOMESTIC PRODUCERSDOMESTIC PRODUCTIONDOMESTIC SALESDOMESTIC TAX SYSTEMDOMESTIC TAXESECONOMETRICSECONOMIC POLICIESECONOMIC POLICYECONOMIC THEORYECONOMIC WELFAREELASTICITY OF SUBSTITUTIONELIMINATION OF TARIFFSEQUIPMENTEXCHANGE RATESEXCISE DUTIESEXCISE TAXESEXPENDITUREEXPENDITURESEXPORT CLAUSEEXPORT PROMOTIONEXPORT TAXESEXPORTEREXPORTERSEXPORTSEXTERNALITIESFINAL GOODSFISCAL DEFICITFISCAL POLICYFOREIGN EXCHANGEFOREIGN PRODUCTSFOREIGN TRADEFREE TRADEFREE TRADE AGREEMENTFREE TRADE AREAFREE TRADE AREASFREE TRADE ZONEGDPGDP PER CAPITAGENERAL AGREEMENT ON TARIFFSGENERAL EQUILIBRIUMGENERAL EQUILIBRIUM ANALYSISGNPGOVERNMENT EXPENDITURESGOVERNMENT FINANCEGOVERNMENT REVENUEGOVERNMENT REVENUESGROSS DOMESTIC PRODUCTHIGH TARIFFSIMPACT OF TRADEIMPACT OF TRADE LIBERALIZATIONIMPORT DATAIMPORT DUTIESIMPORT DUTYIMPORT FIGURESIMPORT LICENSINGIMPORT SUBSTITUTIONIMPORT TARIFFSIMPORT VALUEIMPORTSINCOME LEVELSINCOME TAXINCOME TAXESINFLATIONINSTITUTIONAL CAPACITYINSURANCEINTEREST BURDENINTERMEDIATE GOODSINTERNATIONAL BANKINTERNATIONAL ECONOMICSINTERNATIONAL ORGANIZATIONSINTERNATIONAL STANDARDINTERNATIONAL TRADELDCSLEVEL OF PROTECTIONLEVYLIBERALIZATION OF TRADELOCAL MARKETLOSS OF REVENUELOSS OF TARIFF REVENUELOW TARIFFSMARGINAL REVENUEMARGINAL VALUEMONETARY FUNDMOST FAVORED NATIONMULTILATERAL REFORMSNATIONAL INCOMENATURAL RESOURCESOPEN ECONOMIESOPEN ECONOMYOPENNESSPER CAPITA INCOMEPERSONAL INCOMEPOLICY RESPONSESPOLITICAL ECONOMYPREFERENTIAL RATESPREFERENTIAL TARIFFPREFERENTIAL TARIFF RATEPRICE CHANGEPRICE CHANGESPRICE EFFECTSPRICE ELASTICITYPRICE OF IMPORTSPRODUCTION EFFICIENCYPRODUCTION FUNCTIONSPROTECTIONISTPROTECTIONIST BIASPUBLIC FINANCEREGIONAL TRADERETURNSTARIFF ELIMINATIONTARIFF EXEMPTIONSTARIFF INCREASESTARIFF LEVELSTARIFF LINESTARIFF RATETARIFF RATESTARIFF REDUCTIONTARIFF REFORMTARIFF REVENUETARIFF REVENUESTARIFF STRUCTURETAXTAX COLLECTIONTAX CREDITTAX POLICYTAX RATESTAX REGIMETAX REVENUETAX REVENUESTAX SYSTEMTAXATIONTOTAL REVENUETRADE ADJUSTMENTTRADE AGREEMENTSTRADE BLOCSTRADE DISTORTIONSTRADE LIBERALIZATIONTRADE MORETRADE NEGOTIATIONSTRADE POLICYTRADE POLICY REFORMTRADE POLICY REFORMSTRADE PRACTICESTRADE PROTECTIONTRADE REFORMTRADE REFORMSTRADE TAXTRADE TAXESTRADE VALUETRADINGTRADING PARTNERSTRANSACTIONTRANSITION COUNTRIESUTILITY FUNCTIONVALUATIONVALUE ADDEDVALUE OF IMPORTSVALUE OF OUTPUTWEALTHWELFARE GAINSWITHHOLDING TAXESWORLD PRICEWORLD TRADEWORLD TRADE ORGANIZATIONWTOZERO TARIFFZERO TARIFFSWorld Bank10.1596/1813-9450-5919