Dependence on customs revenue

Incidence

Compared with developed countries, developing countries depend on customs duties for a much larger proportion of government revenue; and the condition of their administrative apparatus makes it difficult for them to resort to other forms of taxation. This increases the reluctance to accept substantial trade liberalization commitments, particularly with other developing countries.

Counter-claim

Dependence on customs revenue is not an important problem at all. In fact, customs duties have historically provided stable funding for governments, especially in developing economies. Modern trade systems and diversified tax bases further reduce any real risk. Concerns about overreliance are exaggerated; customs revenue remains a practical, manageable source of income. There are far more pressing economic issues deserving attention than this overblown, largely theoretical worry.