The Taxation Implicit in Two-Tiered Exchange Rate Systems

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Abstract

A two-tiered exchange rate system can be interpreted as a set of separate taxes on money and other financial assets.If the official two-tiered exchange rate system coexists with a black market for foreign exchange, then there is an implicit taxation of international goods trade as well.This paper presents some evidence on the tax rates and tax revenues implicit in the exchange rate systems of the Bahamas (from 1978 to 1995), the Dominican Republic (from 1970 to 1984) and South Africa (from 1973 to 1995).Only the Bahamas appears to have received positive tax revenues from the implicit taxation of international capital flows, while only South Africa is estimated to have obtained positive tax revenues from the implicit taxation of international goods trade.
Original languageEnglish
Place of PublicationTilburg
PublisherMacroeconomics
Number of pages13
Volume1996-100
Publication statusPublished - 1996

Publication series

NameCentER Discussion Paper
Volume1996-100

Keywords

  • taxation
  • exchange rate

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