Applying the LASSO method to predict the impact of tariff reductions on customs revenues in Vietnam

  • Received June 12, 2020;
    Accepted August 17, 2020;
    Published December 1, 2020
  • Author(s)
  • DOI
    http://dx.doi.org/10.21511/ed.19(3).2020.03
  • Article Info
    Volume 19 2020, Issue #3, pp. 19-31
  • TO CITE
  • 143 Views
  • 9 Downloads

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License

The study assesses the impact of tariff reductions on fluctuations in customs revenues in Vietnam. The collection of research data was based on the official sources, namely the Government’s Web Portal and the World Bank’s website, and took place between 2002 and 2017. This paper uses the LASSO (Least Absolute Shrinkage and Selection Operator) linear regression model to estimate and predict the relationship of data series, thereby drawing a regression equation to consider the impact of various factors on customs revenues. The results have proven that tariff reductions have no negative impact on customs revenues. When tariffs are reduced, import turnover increases, the level of compliance with tax laws by import-export enterprises increases, and smuggling and trade fraud decrease. Based on these conclusions, the paper proposes several policies aimed at ensuring future customs revenues in Vietnam. As follows from the findings provided below, in order to ensure customs revenues, the Vietnamese Government should introduce appropriate policies to improve the efficiency of customs management in Vietnam; envisage accurate planning and reasonable investment for the customs office in terms of facilities and human resources; establish reasonable non-tariff barriers to prevent fraud and abuse causing losses in customs revenues.

view full abstract hide full abstract
    • Figure 1. Vietnam customs revenue and average tariffs from 2002 to 2017
    • Table 1. Descriptive statistics
    • Table 2. Optimal lambda definition
    • Table 3. Regression coefficients by the LASSO method
    • Conceptualization
      Le Thi Anh Tuyet
    • Data curation
      Le Thi Anh Tuyet
    • Formal Analysis
      Le Thi Anh Tuyet
    • Funding acquisition
      Le Thi Anh Tuyet
    • Investigation
      Le Thi Anh Tuyet
    • Methodology
      Le Thi Anh Tuyet
    • Resources
      Le Thi Anh Tuyet
    • Software
      Le Thi Anh Tuyet
    • Supervision
      Le Thi Anh Tuyet
    • Validation
      Le Thi Anh Tuyet
    • Visualization
      Le Thi Anh Tuyet
    • Writing – original draft
      Le Thi Anh Tuyet
    • Writing – review & editing
      Le Thi Anh Tuyet