International Tax and Public Finance

, Volume 21, Issue 1, pp 153–173 | Cite as

Reporting import tariffs (and other taxes)



This paper derives the implications for compliance and fiscal revenues of a tax base that is the product of several factors. For instance, in the case of import tariffs, the tax base is the product of quantity and unit value, both reported to, and during an audit assessed by, the custom authority. Import tariffs are particularly interesting as custom receipts represent an important share of government revenues in many developing countries and there has recently been a surge in empirical studies showing how evasion in this field is a pervasive phenomenon. I show that, with a multiplicative tax base, when the fiscal authority has an imperfect detection technology a greater declaration in one dimension actually increases the fine when evasion in the other dimension is detected. Therefore, there is an additional incentive for the taxpayer to underdeclare and a multiplicative tax base is subject to more evasion, compared to a tax base that can be assessed directly. As a result, fiscal revenues decrease with the dimensionality of the tax base. Also, voluntary compliance and fiscal revenues may be higher when the importer is required to declare only the total value of imports instead of quantity and unit value separately.

This paper provides an argument in favour of uniform or specific tariffs and a reason for why a flat tax may improve compliance.


Tariff Tax evasion Multiplicative tax base Imperfect detection Flat tax 

JEL Classification

F13 H26 H27 K42 O17 O24 



I thank the Institute of Economics at the Hungarian Academy of Sciences, where part of this research was conducted, for its hospitality. I would like to thank the editor, Eckhard Janeba, and two anonymous referees for invaluable suggestions.


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Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  1. 1.University of SouthamptonSouthamptonUK
  2. 2.UniCredit & Universities FellowCentral European UniversityBudapestHungary
  3. 3.IZABonnGermany

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