آزاد سازی تجاری مشترک و اصلاح مالیاتی در یک اقتصاد باز کوچک : مورد مصر

We develop a CGE model of the Egyptian economy to analyze the impact of various trade liberalization scenarios, allowing distortionary domestic taxes to vary endogenously in order to satisfy a fixed real government revenue target. We decompose computed welfare gains into effects from tax reform, trade reform, and their interaction. Scenarios include removal or unification of the consumption tax, capital tax, or both, and tariff unification, a free-trade agreement with the European Union, and unilateral tariff elimination. Welfare effects depend critically on the type of revenue replacement tax. While both are important, neither trade-policy reform nor tax reform dominates.

An important issue in assessing the welfare impacts of trade liberalization programs is that tariff cuts interact with domestic taxes in two ways. First, both tariffs and taxes may be distortionary, implying that in a second-best world, reductions in trade barriers could raise or lower the marginal excess burden of the existing tax structure. Second, as governments lose revenues from liberalized trade taxes they may be forced to raise domestic tax rates in compensation. The latter possibility is significant in developing economies, which tend to rely heavily on tariff revenues to finance central-government programs. If the tax structure distorts consumption and production decisions, this endogenous response in taxes could blunt or even overturn the welfare gains from trade reform. Our purpose in this paper is to investigate the importance of these interactive effects with a computable general equilibrium (CGE) model of trade liberalization developed for Egypt (Maskus and Konan, 1997). In the CGE model, we simulate a number of different potential trade reform measures in Egypt, including tariff unification, a free trade agreement with the European Union (EU), and unilateral free trade on a global basis. We perform these simulations against an idealized backdrop of lump-sum taxation as well as two types of intersectorally distortionary taxes, one on capital use and one on consumption of commodities. Next, these taxes are subject to reform (unification) in all simulations, allowing a comparison of welfare impacts. The approach allows tax instruments to vary endogenously within the model to replace lost government revenues when trade is liberalized or taxes are reformed. Using this technique, we can decompose total welfare changes from policy reform into a pure trade-reform effect, a tax-reform effect, and an interaction term representing the joint inefficiencies of the two regimes. Egypt relied on import duties for roughly seventeen percent of its central government tax revenues in 1994, the year of our benchmark data set (International Monetary Fund, 1997). A paramount concern of policymakers is the impact of trade liberalization on the fiscal integrity of Egypt's overall tax regime. Our simulations demonstrate a significant and occasionally surprising interaction between trade and domestic taxes. As would be anticipated, full liberalization of trade barriers results in lost tariff revenues and requires an increase in domestic taxes to maintain government revenue neutrality. However, less radical reforms such as unification of tariff rates or preferential elimination of tariffs against European imports actually generate higher government revenues as production and consumption activities flow into sectors of the economy that are heavily taxed at the domestic level. Thus, certain forms of trade liberalization may be accompanied by a lowering of domestic taxes while preserving an equal-yield tax system. In Section 2, we review prior literature that informs the current study. In Section 3, we present a two-sector, two-factor general-equilibrium model of trade liberalization in the presence of distortionary taxes in order to illustrate the principles involved. In Section 4, we discuss the Egyptian model in terms of assumptions, data, dimensions, and parameters. In Section 5, we perform the simulations of trade policy and the associated decompositions. In general, we find that welfare gains from pure trade liberalization are comparable in magnitude to gains available from tax reform, while endogenous responses in tax rates can increase or decrease welfare. We provide concluding comments in Section 6.

It is important that applied general equilibrium analyses focus on the important interrelationships between trade policies and tax regimes. Because economies are subject to numerous distortions, the gains from trade liberalization may be smaller than anticipated from standard trade theory, both because of policy interactions in a second-best context and because governments may feel constrained to offset revenue losses with increases in distorting taxes. We have demonstrated, in the context of the Egyptian economy, that both trade restrictions and taxes on commodity consumption and capital use are distortionary. Thus, the economic effects of various types of trade and tax reform are sensitive to the government's choice of revenue-replacement rule. In Egypt, capital taxes seem to be more distorting than the goods and service tax. Higher capital taxes through an endogenous revenue response tend to appreciate the real exchange rate, reduce the real returns to capital, and to blunt or even overturn the gains from trade liberalization. Indeed, it is possible that unilateral free trade would reduce Egyptian welfare, if taken in conjunction with removing the GST, because capital taxes would need to rise precipitously. In general, our results indicate that both trade and tax distortions are important and that they interact in determining the efficiency costs of revenue-generating policies. Various policy combinations may also redistribute income via effects on real factor prices. Accordingly, trade liberalization in the face of distortionary taxes, maintaining a fixed revenue target, is liable to produce markedly smaller welfare gains than is available from joint policy reform. This statement applies also to the impact of tax reform in the presence of trade restrictions. Such findings, building on the earlier work of Clarete and Whalley (1988), Harrison et al. (1993b), and others pose a challenge to the view that reducing trade restrictions represents a movement toward economic efficiency. Rather, analysts should consider the impacts of trade reform conditioned by the structure of other economic distortions and study the possibilities for joint reform as well.