Trade Protection And Tax Evasion: Evidence From Kenya, Mauritius And Nigeria

The authors examine the effect of trade protection rates on evasion in three African countries Kenya, Mauritius and Nigeria. In capturing the effect of trade protection on tariff evasion, they use a much improved measure of trade protection from MacMAP 2001 and 2004. For two of these countries, the MacMAP dataset allows the novelty of using variation in trade protection across product, time and trading partners leading to significantly refined estimates of evasion elasticity relative to existing studies on tariff evasion. They find a robust evidence for positive elasticity of evasion with respect to tariffs in Kenya and Nigeria with relatively weaker evidence for Mauritius. The results match the rankings of countries in institutional quality (in terms of the Corruption Perception Index).