Taxation structures in small states with special reference to revenue implications following trade liberalisations

Abstract

This study looks at the taxation structures of Small States and analyses the extent to which they differ from those of larger countries. It also discusses the possible tax revenue implications for Small States, following a reduction in trade taxes as a result of trade liberalisation, and the eventual move towards income- and consumption-based taxes. This study shows that there is a substantial difference in the taxation structures of Small States, depending on their level of development. An important finding presented in the paper is that the proportion of trade tax to total tax revenue is negatively related to the level of development and to the size of the country, while it is positively related to economic openness.