Illicit Schemes : Fossil Fuel Subsidy Reforms and the Role of Tax Evasion and Smuggling
This study develops a computable general equilibrium model for Nigeria, which accounts for informality, tax evasion, and fuel smuggling. By studying the impact of fuel subsidy reform on consumption, tax incidence, and fiscal efficiency, it shows th...
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| Format: | Working Paper |
| Language: | English |
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World Bank, Washington, DC
2022
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| Online Access: | http://documents.worldbank.org/curated/undefined/631951642691400564/Illicit-Schemes-Fossil-Fuel-Subsidy-Reforms-and-the-Role-of-Tax-Evasion-and-Smuggling http://hdl.handle.net/10986/36878 |
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okr-10986-368782022-01-28T05:10:35Z Illicit Schemes : Fossil Fuel Subsidy Reforms and the Role of Tax Evasion and Smuggling Rentschler, Jun Hosoe, Nobuhiro FUEL SUBSIDY TAX EVASION SMUGGLING CGE MODEL This study develops a computable general equilibrium model for Nigeria, which accounts for informality, tax evasion, and fuel smuggling. By studying the impact of fuel subsidy reform on consumption, tax incidence, and fiscal efficiency, it shows that the presence of illicit activities substantially strengthens the argument in favour of subsidy reform: First, fuel subsidy reform can shift the tax base to energy goods, which are less prone to tax evasion losses than for instance labour. Second, by reducing price differentials with neighbouring countries, subsidy reform reduces incentives for fuel smuggling. Overall, the results show that considering illicit activities reduces the welfare losses of fuel subsidy reform by at least 40 percent. In addition, fuel subsidy reductions (and by extension energy tax increases) have a strong progressive distributional impact. The findings hold under different revenue redistribution mechanisms, in particular uniform cash transfers and the reduction of pre-existing labour taxes. 2022-01-27T13:40:41Z 2022-01-27T13:40:41Z 2022-01 Working Paper http://documents.worldbank.org/curated/undefined/631951642691400564/Illicit-Schemes-Fossil-Fuel-Subsidy-Reforms-and-the-Role-of-Tax-Evasion-and-Smuggling http://hdl.handle.net/10986/36878 English Policy Research Working Paper;No. 9907 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Africa Africa Western and Central (AFW) Nigeria |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
FUEL SUBSIDY TAX EVASION SMUGGLING CGE MODEL |
| spellingShingle |
FUEL SUBSIDY TAX EVASION SMUGGLING CGE MODEL Rentschler, Jun Hosoe, Nobuhiro Illicit Schemes : Fossil Fuel Subsidy Reforms and the Role of Tax Evasion and Smuggling |
| geographic_facet |
Africa Africa Western and Central (AFW) Nigeria |
| relation |
Policy Research Working Paper;No. 9907 |
| description |
This study develops a computable
general equilibrium model for Nigeria, which accounts for
informality, tax evasion, and fuel smuggling. By studying
the impact of fuel subsidy reform on consumption, tax
incidence, and fiscal efficiency, it shows that the presence
of illicit activities substantially strengthens the argument
in favour of subsidy reform: First, fuel subsidy reform can
shift the tax base to energy goods, which are less prone to
tax evasion losses than for instance labour. Second, by
reducing price differentials with neighbouring countries,
subsidy reform reduces incentives for fuel smuggling.
Overall, the results show that considering illicit
activities reduces the welfare losses of fuel subsidy reform
by at least 40 percent. In addition, fuel subsidy reductions
(and by extension energy tax increases) have a strong
progressive distributional impact. The findings hold under
different revenue redistribution mechanisms, in particular
uniform cash transfers and the reduction of pre-existing
labour taxes. |
| format |
Working Paper |
| author |
Rentschler, Jun Hosoe, Nobuhiro |
| author_facet |
Rentschler, Jun Hosoe, Nobuhiro |
| author_sort |
Rentschler, Jun |
| title |
Illicit Schemes : Fossil Fuel Subsidy Reforms and the Role of Tax Evasion and Smuggling |
| title_short |
Illicit Schemes : Fossil Fuel Subsidy Reforms and the Role of Tax Evasion and Smuggling |
| title_full |
Illicit Schemes : Fossil Fuel Subsidy Reforms and the Role of Tax Evasion and Smuggling |
| title_fullStr |
Illicit Schemes : Fossil Fuel Subsidy Reforms and the Role of Tax Evasion and Smuggling |
| title_full_unstemmed |
Illicit Schemes : Fossil Fuel Subsidy Reforms and the Role of Tax Evasion and Smuggling |
| title_sort |
illicit schemes : fossil fuel subsidy reforms and the role of tax evasion and smuggling |
| publisher |
World Bank, Washington, DC |
| publishDate |
2022 |
| url |
http://documents.worldbank.org/curated/undefined/631951642691400564/Illicit-Schemes-Fossil-Fuel-Subsidy-Reforms-and-the-Role-of-Tax-Evasion-and-Smuggling http://hdl.handle.net/10986/36878 |
| _version_ |
1764486082395635712 |