Most countries allow travellers (whether visitors or returning travellers) to import stated limits of goods, alcohol and tobacco into the country free of duty and tax.
What is the reasoning behind this? I can't see any benefit to the country, they are just depriving themselves of tax revenue. And if it is to encourage tourists, then why are residents allowed to import duty-free as well?
I could understand small allowances for goods so tourists can bring back souvenirs and visitors can bring gifts, but this does not explain the alcohol and tobacco allowances.
Why did this practice start and why does it still exist?
There have been comments and answers that speculate about the reason but nothing concrete. To clarify, almost all countries have duty free allowances, that are not based on reciprocity. E.g. Barbados does not allow you to take in cigarettes, Saudi Arabia forbids alcohol, yet travellers from these countries can bring them in to other countries. A traveller from Dublin to London can bring in 4 litres of spirits on the outbound journey but only 1 litre on return.
In terms of practicality, as in why bother taxing people on a small amount or creating friction at the border, well many governments do not have any qualms about this sort of thing. Duty-free allowances do not just exist in democracies where the ruling party have to curry favour with the populous but in absolute monarchies and dictatorships.
Duty-free seems to exist in almost all countries regardless of the type of governance. It is almost a universal norm. Why is this?
Regarding current duty-free allowances, there must be acts of parliament, congress etc. that permit them. And there must also be reasoning behind them.