Corruption Risks in Differential Taxation on Goods: Insights from Bhutan Trade Statistics and Case Examples

Abstract

Differential taxation on goods, while often implemented to achieve social or economic objectives, may inadvertently create opportunities for corruption. This paper examines the inherent vulnerabilities of such systems, exploring the various ways in which they can be exploited for personal gain. With a comprehensive methodology that includes the literature review, real-world case examples, and information analysis from various sources, the paper aims to provide a nuanced understanding of the corruption risks inherent in tax systems characterized by varying rates on different goods. The paper concludes by proposing measures to mitigate these risks offering valuable insights for policymakers and practitioners