Explain why tariffs are a primary revenue source for less-developed co

Explain why tariffs are a primary revenue source for less-developed countries but not for developed countries.

What will be an ideal response?

ANSWER

In less-developed countries, it is difficult to monitor things like income and internal transactions, but relatively easier to monitor international transactions. Since monitoring is easier on goods crossing the border, less-developed countries end up generating a large portion of their revenue through tariffs. In developed countries, it is far easier to monitor taxpayer income and, given the far greater revenue potential from taxing income, developed countries are more likely to raise a considerable amount of revenue from income taxes.