Impact of Revenue Administration on Trade Facilitation Performance in Liberia

Abstract

As a result of a growing awareness of the importance of trade facilitation, governments around the world have signed several bilateral, subregional, and regional trade facilitation agreements that demonstrate the global reach of the concept. Despite the fact that most of these initiatives are robust and ambitious, the vast majority of them have had little results. Based on the desire to reduce the cost of doing business and create an environment conducive to attracting investment for economic development, trade facilitation is becoming increasingly attractive to many countries around the world. In West Africa, trade facilitation was used to assess the impact of four key factors; Port efficiency, customs environment, regulatory environment, and use of e-commerce. On the other hand, these areas have had their fair share of challenges in facilitating trade. For example, Liberia, as a member of the ECOWAS region, received a poor score in the World Bank's 2019 Ease of Doing a business study, ranking 175th out of 190 countries evaluated. Liberia is on the decline, according to the World Bank's latest annual rankings, as it ranked 174th out of 190 countries in 2018 in terms of ease of doing business in the ECOWAS region, before the last survey was conducted in 2019. Hence the study's main objective was to determine the impact of revenue administration on Liberia's trade facilitation performance. To achieve the objective, the study examined the influence of revenue administration in tax collection on trade facilitation performance, the influence of revenue administration in controlling the flow of goods on trade facilitation performance, the influence of revenue administration in social protection on trade facilitation performance, and the impact of governance structure on the relationship between tax administration and trade facilitation performance in Liberia. The theory of mercantilism, the Heckscher-Ohlin theory (theory of factor proportions), the theory of global strategic rivalry, and Porter's theory of national competitive advantage, as well as several empirical studies, are among the literature that has influenced this research. The primary data was collected using a structured questionnaire distributed to 180 respondents working in the Liberian Revenue Administration (LRA) customs departments. To test the hypothesis, a descriptive research design with a cross-sectional character was used, which enabled the examination of the correlations between the study variables. Simple linear and multiple regression models were used in the model specification. The study concluded that there is a positive and significant relationship between the revenue administration in tax collection and trade facilitation performance in Liberia, that there is a positive and significant relationship between the tax administration in controlling the flow of goods and the performance of trade facilitation in Liberia, and that in Liberia there was a positive and significant association between social protection, tax administration and trade facilitation performance. The study concludes that the governance structure has a full moderating effect on the relationship between tax administration and trade facilitation performance in Liberia. The role of civil society organizations in tax administration, the impact of effective border management on trade facilitation, and alleviating liquidity concerns for businesses and individuals in the post-COVID-19 era and tax collection are all areas where more research is needed.