Abstract
Subsistence foodcrops and incomes are hard to tax in developing countries. It is easy, and common, to tax agricultural imports and exports. If domestic transactions cannot be taxed, how should agricultural trade taxes be set, and how should indirect taxes on nonagricultural consumer goods be set? This paper derives and quantifies formulas for the optimal export tax on a nonfood agricultural product, Ghanaian cocoa, in which the country has market power, and the level of indirect taxes on taxable consumer goods. It asks whether, starting from free trade on cereals, there should be import tariffs or subsidies. Copyright 1990 by Royal Economic Society.
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