Customs drawback is a system in which customs duties and other taxes levied on imported raw materials can be refunded after they are incorporated as a part of export goods. This study analyzes that the economic effect of customs drawback on Korean economy. The primary reason that we analyze this effect is to answer the question of whether Korean government sustains the drawback system, which helps to increase export, on the other side, which yields both an administration and a compliance cost, called social cost.
We compare two policy options: sustaining the current draw- back system, or lowering tariff burdens with the discontinuance of the current drawback system.
Without considering the social cost, we find that there is no change in welfare between two policy options. That is, we can say that the government does not have an incentive to dis- continue the current drawback system. However, when we do consider the social cost, the lowering tariff burdens with the discontinuance of the current drawback system might increase our welfare.
In Korea, the proportion of amount of drawback to tariff revenue is 38.2%. Its rate is much higher than that of other countries; for example, the rate in U.S. is about 2% and Japan is about 0.5%. Therefore, in Korea, we can say that we are paying much more social cost to sustain the current drawback system. However, if Korean government has an incentive to promote export which drives Korea economy as it believes, and government is imposing more weight on export than other welfare surplus, the sustaining the current drawback system might still optimize government objective. (The rest omitted)
- 관세환급제도가 우리 경제에 미치는 영향(The effect of drawback of custom duty on Korean economy)
- 정재호; 이명헌
관세환급제도가 우리 경제에 미치는 영향(The effect of drawback of custom duty on Korean economy)
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Trade
Economy < Economic Administration