Impact of Trade Liberalization on the Government Tax Revenue of Ethiopia by Reducing the Tariff Rate: Using a Simple Commutable General Equilibrium Model
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Date
2008-07
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A.A.U
Abstract
1999 was the time the military regime relinquished political power and the
new government took over the power. The new government initiated a wide
range of reform programme some of which are directly related to trade
liberalization
In this paper a two-sector , three-goods simple computable general
Equilibrium (1-2-3 CGE) model, developed by S .Devarajan et.al. at the the reduction of the tariff rate in three scenarion on government tax
revenue and saving of Ethiopia. Moreover, it examines the coordination of
domestic tax and trade tax with out affecting the total tax revenue of the
country using the 1-2-3 CGE model.
The simulation result of the model when reducing tariff rate is an overall
decline of the government tax revenue and government saving of the
country in the three different scenarios. Furthermore, by increasing
domestic tax it possible compensate the loss from tariff reduction with out
affecting the total government tax revenue.
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Keywords
Government tax revenue and tariff reduction, (1 -2 -3CGE) Model, Simple Computable General Equilibrium, Trade liberalization