Trade Liberalization and Tax Revenue Mobilization in ECOWAS Countries

This study is an empirical assessment of the effects of trade liberalization on total tax revenues and their various components in the countries of the Economic Community of West African States (ECOWAS). The study uses data from a sample of 13 countries and covering the period 1990-2016. Using a fixed effects model, the study found that despite the decline in customs revenues caused by trade liberalization, this enabled the countries in the sample to increase both the domestic revenues and the total tax revenues. The study therefore recommends that the governments of the ECOWAS countries should adopt a policy of low tariffs and openness to international trade to strengthen their mobilization of domestic tax revenues. However, this trade liberalization policy must be accompanied with an appropriate macroeconomic policy capable of ensuring a stable economic environment, and good governance, if trade liberalization has to be credible as a policy.