Abstract
As the high tariff barriers of the inter-war period have been gradually reduced over the past twenty years, non-tariff factors have taken on an increasingly important role. One of the more notable of these factors is a country's level of excise taxes. Since these taxes are applied to both imports and domestic production, it is obvious that a given percentage change in excise taxes will have a smaller influence on trade than an equal percentage change in tariffs. Nevertheless, excise takes can be used to some extend as a substitution for tariffs. Hence, it would seem desirable to determine the degree to which such substitution will affect the volume of imports.
The role of taxes and tariffs in trade models has been considered in a number of theoretical discussions.Footnote 1 However, virtually no effort has been made to examine the relationships among excise taxes, tariffs and imports in order to determine the extent to which countries can use excise taxes as a device to counterbalance the movement toward freer trade through the aegis of G.A.T.T. This study will attempt to rectify this omission.
* The author is Assistant Professor of Economics at the University of Windsor. He is indebted to the referee for his many helpful comments.
1 The effects of commodity taxes on the terms of trade and on domestic welfare have been analysed by MUNDELL, (1960), and by FRIEDLAENDER and VANDENDORPE (1968).
* The author is Assistant Professor of Economics at the University of Windsor. He is indebted to the referee for his many helpful comments.
1 The effects of commodity taxes on the terms of trade and on domestic welfare have been analysed by MUNDELL, (1960), and by FRIEDLAENDER and VANDENDORPE (1968).
Notes
* The author is Assistant Professor of Economics at the University of Windsor. He is indebted to the referee for his many helpful comments.
1 The effects of commodity taxes on the terms of trade and on domestic welfare have been analysed by MUNDELL, (1960), and by FRIEDLAENDER and VANDENDORPE (1968).