Increasing the rate of domestic taxes imposed on imported goods - Some economic and legal issues

Abstract

In the context of integration, cutting import taxes has brought the ecomony many benefits. The gradual reduction of the rate of import taxes in accordance with the route stated under international commitments is, however, still a big chanllenge for many countries including Vietnam where the revenue of import taxes accounts for a large part of the state budget. Increasing the rate of domestic taxes imposed on imported goods is considered as an effective measure to recover the reduced revenue but it also faces potential risks, in both economic and legal aspects. To clarify this issue in question, the paper offers an analysis of the impact of increasing the rate of taxes imposed on imported goods in a small open economy; it assesses the relevance of this policy measure to the rules of the World Trade Organisation and offers recommendations on policy making and implementation of state management agencies of Vietnam.