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Optimal export taxes for exporters of perennial crops

Author

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  • Imran, Mudassar
  • Duncan, Ron

Abstract

Primary commodity prices are subject to substantial export taxes in a large number of developing countries. The purpose of this paper is to determine the optimal export tax for major exporters of cocoa, tea, coffee, and natural rubber -- the primary commodities most heavily taxed by developing countries. Since the estimate of the optimal export tax is based in part upon the estimate of the foreign elasticity of demand and the supply response from the rest of the world, the question arises whether it is the long-run elasticities or the short-run elasticities that are relevant to the tax setting behaviour. In making the decision, the choice arises between lower foreign exchange earnings in the short run and higher earnings later on or higher export earnings now and lower revenues later. It is hypothesized that those countries with a heavy dependence upon revenues from this source will tend to set the tax with respect to the short-run elasticities. It is shown here that the optimal tax will also depend upon the length of the adjustment period between the short run and the long run and the government's rate of time discount.

Suggested Citation

  • Imran, Mudassar & Duncan, Ron, 1988. "Optimal export taxes for exporters of perennial crops," Policy Research Working Paper Series 10, The World Bank.
  • Handle: RePEc:wbk:wbrwps:10
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    Citations

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    Cited by:

    1. Varangis, Panos, 1989. "Coffee pricing policies in the Dominican Republic," Policy Research Working Paper Series 211, The World Bank.
    2. Wiebelt, Manfred & Herrmann, Roland & Schenck, Patricia & Thiele, Rainer, 1992. "Discrimination against agriculture in developing countries?," Open Access Publications from Kiel Institute for the World Economy 458, Kiel Institute for the World Economy (IfW Kiel).
    3. Jaeger, William & Humphreys, Charles, 1988. "The Effect of Policy Reforms on Agricultural Incentives In Sub-Saharan Africa," 1988 Annual Meeting, August 1-3, Knoxville, Tennessee 270395, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Ronald C. Duncan, 1993. "Agricultural Export Prospects for Sub‐Saharan Africa," Development Policy Review, Overseas Development Institute, vol. 11(1), pages 31-46, March.
    5. Mitra, Pradeep, 1990. "The coordinated reform of tariffs and domestic indirect taxes," Policy Research Working Paper Series 490, The World Bank.
    6. Arvind Panagariya & Maurice Schiff, 1991. "Política Comercial, Exportaciones de Productos Básicos y Bienestar: Teoría y Aplicación al Cacao," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 28(84), pages 249-270.
    7. Todorova, Tamara, 2010. "World Demand as a Determinant of Immiserizing Growth," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 2(3), pages 255-267.

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