Fiscal Dependence on Trade Taxes and Economic Development: Some New Evidence

This paper investigates the association between a country's share of trade taxes in total tax revenue, its development level, and 'openness to international trade.' It argues that the appropriate way to model these associations is by a continuous logistic function rather than by a series of (log) linear segments. Results from an extensive data set support the proposed logistic form and confirm that real income and trade openness elasticities may be low both at relatively low and at relatively high income levels. EC membership is also shown to have an important effect on members' trade tax shares.