Consumer imports and their impact on indirect tax revenue in Barbados

Author(s): Campbell, Trevor (2004

Created 01 Jan, 2004
Categories Working Papers
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Consumer imports have played a significant role in the development of Barbados over the years. They are broken down mainly into motorcars and food and beverages. The relationship between consumer imports and indirect taxes is an easily identifiable one. When goods arrive into Barbados' ports, they are subject to import duties, value-added taxes and in some instances, excise taxes, all classified as indirect taxes, the major component of Government's revenue collections. This paper uses regression analysis to see to what extent changes in consumer imports will influence indirect taxes in the long and short run between 1970 and 2001. The results show that in the long run, a per unit change in consumer imports will boost indirect taxes by 0.46% while in the short run, a similar change in consumer imports will increase indirect taxes sharply by 0.78%. This implies a significant impact on Government's fiscal account in the short run, with some slowing anticipated over the medium and long term.

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