The Impact of Export and Import Tax Policy on Ugandan Economy: A Computable General Equilibrium Approach

Abstract

This study examines the impact of reducing export duties and import tariffs on the economy of Uganda. Analysis uses a computable general equilibrium (CGE) model focusing basically on domestic output, imports, exports and trade balance. Results from the model show that aggregate domestic output, exports and imports increase if the trade taxes are reduced. These economic gains are much higher if both import tariffs and export duties are reduced or removed rather than removing only tariffs. However, trade balance deficit widens because the increase in imports will exceed the increase in exports. Furthermore, government budget deficit worsens due to loss of government revenue from trade taxes.



Key words: Computable general equilibrium (CGE) model, exports, imports, tariffs, tax



Eastern Africa Journal of Rural Development (2001) 17, 9-17