Import Liberalisation and Revenue Replacement: Impacts in a Small Asian Developing Economy

摘要

Using a multi-sectoral computable general equilibrium model, we assess the macro-economic and welfare impacts of import liberalisation along with revenue replacement from domestic taxes in the small developing economy of Nepal. We conclude that impact differs across activities. For example, agricultural and industrial activities expand whereas service activities contract. Overall, GDP grows marginally along with insignificant changes in other macroeconomic features. However, as an impact of this policy, incomes of the richest household group grow faster than that of poorer households. Furthermore, the replacement by the domestic indirect tax lowers the GDP growth rate and makes the distribution pattern more unfavourable to the poor; whereas the replacement by the income tax and non-agricultural commodity tax causes GDP to grow at a relatively higher rate and does not negatively affect the distribution pattern except for one of the richer household groups. The welfare gains to households in all the scenarios are positive but are very minimal.