Evaluate the Effect of Customs Tax Reduction on the Algerian Economy by using a CGEM

Abstract

The aim of this study is to establish a framework for analyzing the effects of customs tax reduction on the Algerian economy. To this end, we have built a model of the general accountable balance of the Algerian economy with the aim of quantifying the impact of the reduction of customs tax on the Algerian economy by relying on the database of the social accounting matrix for the year 2014. After we developed the model, we developed a set of simulations to measure this effect, which is in reducing / removing customs tax. The removal of the customs tax resulted in a decrease (loss) in government revenue. The results showed that the reduction / elimination of the customs tax led to an increase in production, exports, and imports in most sectors, but the government income witnessed a significant decrease as a result of the total liberalization of trade, which results from the removal of the customs tax, which necessarily leads to a decrease in the value of customs rights from indirect taxes Considered as a source of government revenue. The results also showed that reducing / removing the customs tax increased the consumer welfare