{"title":"Taxation with information: Impacts of customs data exchange on tax evasion in Pakistan","authors":"Chao Fang","doi":"10.1016/j.ecosys.2024.101243","DOIUrl":null,"url":null,"abstract":"<div><div>A key challenge for developing countries is improving border taxes<span><span> enforcement. This study examines whether the Electronic Data Exchange project between Pakistan and China can reduce tax evasion at the Pakistan border. This data exchange significantly reduced the trade gap in consumer goods between China’s reported exports to Pakistan and Pakistan’s reported imports from China, compared to non-consumer goods. These results are consistent with the weak self-enforcing incentives of value-added tax at the consumer stage. Moreover, the data exchange primarily reduced the trade gap by limiting the underreporting of prices rather than reducing the underreporting of quantities, partly fulfilling the project’s original intention. Further </span>exploratory analysis reveals that the data exchange contributed to a reduction in export prices, indicating that Chinese exporters might have been absorbing a portion of the tax burden. This study suggests that using export declarations to improve tax enforcement might not increase tax revenue, as importers and exporters could alter their behavior strategically.</span></div></div>","PeriodicalId":51505,"journal":{"name":"Economic Systems","volume":"49 1","pages":"Article 101243"},"PeriodicalIF":2.8000,"publicationDate":"2025-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Economic Systems","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0939362524000657","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
A key challenge for developing countries is improving border taxes enforcement. This study examines whether the Electronic Data Exchange project between Pakistan and China can reduce tax evasion at the Pakistan border. This data exchange significantly reduced the trade gap in consumer goods between China’s reported exports to Pakistan and Pakistan’s reported imports from China, compared to non-consumer goods. These results are consistent with the weak self-enforcing incentives of value-added tax at the consumer stage. Moreover, the data exchange primarily reduced the trade gap by limiting the underreporting of prices rather than reducing the underreporting of quantities, partly fulfilling the project’s original intention. Further exploratory analysis reveals that the data exchange contributed to a reduction in export prices, indicating that Chinese exporters might have been absorbing a portion of the tax burden. This study suggests that using export declarations to improve tax enforcement might not increase tax revenue, as importers and exporters could alter their behavior strategically.
期刊介绍:
Economic Systems is a refereed journal for the analysis of causes and consequences of the significant institutional variety prevailing among developed, developing, and emerging economies, as well as attempts at and proposals for their reform. The journal is open to micro and macro contributions, theoretical as well as empirical, the latter to analyze related topics against the background of country or region-specific experiences. In this respect, Economic Systems retains its long standing interest in the emerging economies of Central and Eastern Europe and other former transition economies, but also encourages contributions that cover any part of the world, including Asia, Latin America, the Middle East, or Africa.