Export taxes are levied on exports of certain products. They are mainly applied by developing countries and levied primarily on raw materials. A distinction is made between specific and variable export taxes, the ad valorem export tax and the differential export tax:
- Specific export tax: an export tax per unit (e.g. volume or weight) of a product
- Ad valorem export tax: an export tax calculated as a percentage of the price
- Differential export tax: the level of the export tax varies according to the degree to which the product has been processed
- Variable export tax: an export tax based on the world market price. These are often described as minimum export prices.
Export taxes are not yet prohibited within the WTO. They are a popular trade instrument and budget financing tool since the application of export taxes does not have to be justified to the WTO. While new WTO members are required to reduce export taxes step by step, there is no binding agreement on reducing export taxes among existing member states. Because of the absence of a binding arrangement on export taxes in the WTO, their use is increasingly being banned in bilateral and regional trade agreements.
Export taxes can result in higher government revenues, fewer exports and therefore lower consumer prices and can boost the processing industry by providing cheaper inputs. All these measures can strengthen food and nutrition security in the short term and promote economic growth. However, the advantages must be weighed up against unintended negative consequences, e. g. farms could suffer from lower prices, potentially leading to the redistribution of income from rural small-scale farmers to urban processors, consumers and the state.
- A properly functioning country-wide administration and monitoring system with access to the relevant information and sufficient technical and human capacities for its design, implementation and monitoring
- Clear and coherent political strategy and targets for policy-makers and public authorities
- Close cooperation and knowledge sharing with research institutions
- Compatible regional and world trade law (WTO conformity)
- Constant market surveying and forecasting
- Efficient customs administration
- Functioning tax authorities
- Market price information systems
Possible Negative Effects
- Market and trade distortion
- Loss of income for domestic farmers and exporters due to lower domestic prices and fewer exports
- Sales markets and trading partners may be lost and could be difficult to win back in the future
- Lower prices endanger food and nutrition security in the medium and long term
- Economic losses