Multilateral Trade Liberalization and Trade Tax versus Non-Trade Tax Revenue

Abstract

EnglishThis article examines how multilateral trade liberalization (not domestic trade policy liberalization as widely investigated in the relevant literature) influences the extent of tax revenue diversification. The latter is proxied by the ratio of trade tax revenue to non-trade tax revenue. The analysis primarily uses the fixed effects estimator and covers an unbalanced panel comprising 145 countries, over the period 1995-2015. Results show that multilateral trade liberalization increases the extent of tax revenue diversification, i.e., it reduces the ratio of trade tax revenue to non-trade tax revenue. Furthermore, less advanced economies benefit more than relatively advanced countries of the tax revenue diversification impact of multilateral trade liberalization. Additionally, countries that are highly dependent on the agricultural sector (for example, poor countries or low-income countries) experience a higher positive effect of multilateral trade liberalization on tax revenue diversification than countries with a higher share of value added in the non-agriculture sector in total output. These results, therefore, call for further reduction of world trade barriers, in particular through greater cooperation among Members of the World Trade Organization (WTO) to promote multilateral trade liberalization. francaisCet article examine l’impact de la liberalisation commerciale multilaterale (et non de la liberalisation commerciale nationale, largement exploree dans la litterature) sur l’ampleur de la diversification des recettes fiscales. Cette derniere est approximee par le ratio des recettes fiscales commerciales sur le ratio des recettes fiscales non-commerciales. L’analyse utilise principalement l’estimateur des effets fixes, sur un panel desequilibre de 145 pays, couvrant la periode 1995-2015. Les resultats montrent que la liberalisation commerciale multilaterale promeut la diversification des recettes fiscales, c’est-a-dire, qu’elle reduit le ratio des recettes fiscales commerciales aux recettes fiscales non-commerciales. En outre, les pays les moins avances beneficient plus que les pays relativement plus avances de cet impact positif de la liberalisation commerciale multilaterale sur l’ampleur de la diversification des recettes fiscales. Par ailleurs, les pays fortement dependant du secteur agricole enregistrent un effet plus important de la liberalisation commerciale multilaterale sur la diversification des recettes fiscales que les pays dont les economies sont moins dependantes du secteur agricole. Ces resultats suggerent donc qu’une reduction plus importante des barrieres commerciales a l’echelle mondiale, notamment a travers une plus grande cooperation entre les Membres de l’OMC pour promouvoir la liberalisation commerciale multilaterale, contribuerait a renforcer la diversification des recettes fiscales.