Decomposed analysis of import tax changes in Ghana

Purpose – The purpose of the paper is to investigate the quantitative effect of import liberalization on tariff revenue in Ghana. Design/methodology/approach – In an attempt to achieve the objective of the paper, a robust decomposition analytical approach was used to examine how different components of the sources of change in import tax contribute to changes in import tax revenue in Ghana. Findings – The paper concludes that Ghana suffered some revenue loss from the liberalization by reducing the level of average official duty rates, but gained in revenue as a result of real currency depreciation. Practical implications – It has been suggested that public policy should aim at determining and targeting the optimum level of the average official import duty rates, focus on the identification of the major sources of duty revenue leakage, and substitute sales taxes for tariffs to improve tax revenue sufficiently. Originality/value – This paper makes explicit the contribution of alternative import policy features to changes in import tax revenue in Ghana.