TY - JOUR
T1 - Political connections and tariff evasion evidence from Tunisia
AU - Rijkers, Bob
AU - Baghdadi, Leila
AU - Raballand, Gael
N1 - Publisher Copyright:
© The Author 2016. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / THE WORLD BANK.
PY - 2017/6/1
Y1 - 2017/6/1
N2 - Are politically connected firms more likely to evade taxes? This paper presents evidence suggesting firms owned by President Ben Ali and his family were more prone to evade import tariffs. During Ben Ali's reign, evasion gaps, defined as the difference between the value of exports to Tunisia reported by partner countries and the value of imports reported at Tunisian customs, were correlated with the import share of connected firms. This association was especially strong for goods subject to high tariffs, and driven by underreporting of unit prices, which diminished after the revolution. Consistent with these product-level patterns, unit prices reported by connected firms were lower than those reported by other firms and declined faster with tariffs than those of other firms. Moreover, privatization to the Ben Ali family was associated with a reduction in reported unit prices, whereas privatization per se was not.
AB - Are politically connected firms more likely to evade taxes? This paper presents evidence suggesting firms owned by President Ben Ali and his family were more prone to evade import tariffs. During Ben Ali's reign, evasion gaps, defined as the difference between the value of exports to Tunisia reported by partner countries and the value of imports reported at Tunisian customs, were correlated with the import share of connected firms. This association was especially strong for goods subject to high tariffs, and driven by underreporting of unit prices, which diminished after the revolution. Consistent with these product-level patterns, unit prices reported by connected firms were lower than those reported by other firms and declined faster with tariffs than those of other firms. Moreover, privatization to the Ben Ali family was associated with a reduction in reported unit prices, whereas privatization per se was not.
UR - http://www.scopus.com/inward/record.url?scp=85027155881&partnerID=8YFLogxK
U2 - 10.1093/wber/lhv061
DO - 10.1093/wber/lhv061
M3 - Article
AN - SCOPUS:85027155881
SN - 0258-6770
VL - 31
SP - 459
EP - 482
JO - World Bank Economic Review
JF - World Bank Economic Review
IS - 2
ER -