Tariff

For other uses of this word, see tariff (disambiguation). Public finance is a field of economics concerned with paying for collective or governmental activities and with the administration and design of those activities The field of finance refers to the concepts of Time, Money and Risk and how they are interrelated Payroll tax generally refers to two kinds of taxes: Taxes which Employers are required to withhold from Employees Pay, also known as Withholding A capital gains tax (abbreviated CGT) is a Tax charged on Capital gains the profit realized on the sale of a non-inventory Asset that was purchased Stamp duty is a form of Tax that is levied on documents Historically a physical stamp (a Tax stamp) had to be attached to or impressed upon the document to denote Land value taxation (LVT (or site value taxation) is an Ad valorem tax where only the value of land itself is taxed A sales tax is a Consumption tax charged at the Point of purchase for certain goods and services Value added tax ( VAT) or goods and services tax ( GST) is a consumption Tax levied on value added. A flat tax (short for flat rate tax is a Tax system with a constant tax rate The tax tariff and trade laws of a political region State or Trade bloc determine which forms of consumption and production tend to be encouraged A tax haven is a place where certain Taxes are levied at a low rate or not at all In Economics, tax incidence is the analysis of the effect of a particular Tax on the distribution of economic welfare. In a Tax system and in Economics, the tax rate describes the burden Ratio (usually expressed as a Percentage) at which a business or person is A proportional tax is a Tax imposed so that the Tax rate is fixed as the amount subject to taxation increases A progressive tax is a Tax imposed so that the Tax rate increases as the amount subject to taxation increases A regressive tax is a Tax imposed in such a manner that the Tax rate decreases as the amount subject to taxation increases Tax advantage refers to the economic bonus which applies to certain accounts or Investments that are by Statute, tax-reduced tax-deferred or tax-free Personal income taxes See also Income tax in Australia Only the federal government imposes income taxes on individuals and this is the most significant source of Taxation in the British Virgin Islands is relatively simple by comparative standards photocopies of all of the tax laws of the British Virgin Islands would together amount to about 200 The level of Taxation in Canada is average among Organisation for Economic Co-operation and Development (OECD countries Taxes provide the most important revenue source for the Government of the People's Republic of China. See Government of Colombia for a wider perspective of Colombian government See Government of France for a wider perspective of French government Taxes in Germany —being a Federal Republic —are levied by the federation ( Bund) the States ( Länder) as well as the HK Inland Revenue Ordinance Cap112 is one of Hong Kong's Ordinances Taxes in India are levied by the Central Government and the State Governments This article ls with Taxation in Indonesia or pajak. Definitions "Pajak" in Indonesian for Tax and taxes whereas " Perpajakan The system of Taxation in Ireland is broadly similar to the system of Taxation in the United Kingdom. The Netherlands has a rich history dealing with taxation predating the Romanic period. Taxation in New Zealand is collected at a national level by the Inland Revenue Department (IRD on behalf of the Government of New Zealand. The Income tax in Peru is collected by the Superintendencia Nacional de Administración Tributaria, best known as SUNAT. The Russian Tax Code is the primary tax law for the Russian Federation. Individual income tax in Singapore forms part of two main sources of Income tax, the other being Corporate taxes on companies In Tanzania the Income Tax Act 2004 came into effect in July 2004 Taxation in the United Kingdom may involve payments to a minimum of two different levels of government The central government ( Her Majesty's Revenue and Customs) Taxation in the United States is a complex system which may involve payment to at least four different levels of government and many methods of taxation Value added tax ( VAT) or goods and services tax ( GST) is a consumption Tax levied on value added. Comparison of Tax Rates around the world is a difficult and somewhat subjective enterprise This table lists countries by total 2005 Tax revenues (federal state and local as a percentage of GDP (Gross Domestic Product Economic policy refers to the actions that Governments take in the economic field. Monetary policy is the process by which the Government, Central bank, or monetary authority of a country controls (i the Supply of Money, A central bank, reserve bank, or monetary authority is the entity responsible for the Monetary policy of a country or of a group of member states In Economics, money supply, or money stock, is the total amount of money available in an Economy at a particular point in time The gold standard is a monetary system in which a region's common media of exchange are paper notes that are normally freely convertible into pre-set fixed quantities of Gold Fiscal policy, taking the scope of Budgetary policy, refers to government policy that attempts to influence the direction of the economy through changes in government taxes Government spending or government expenditure is classified by economists into three main types A budget deficit occurs when an Entity (often a Government) spends more Money than it takes in Government debt (also known as public debt or national debt) is Money (or credit) owed by any level of government either Central government Trade is the willing exchange of goods, services, or both Trade is also called Commerce. A trade pact is a wide ranging Tax tariff and trade pact that often includes Investment guarantees The field of finance refers to the concepts of Time, Money and Risk and how they are interrelated In Economics, a financial market is a mechanism that allows people to easily buy and sell ( Trade) financial Securities (such as stocks and bonds There are two basic financial market participant categories Investor vs Corporate finance is an area of Finance dealing with the financial decisions Corporations make and the tools and analysis used to make these decisions Personal finance is the application of the principles of Finance to the monetary decisions of an individual or family unit Public finance is a field of economics concerned with paying for collective or governmental activities and with the administration and design of those activities Financial regulations are a form of Regulation or supervision which subjects Financial institutions to certain requirements restrictions and guidelines aiming to A banker or bank is a Financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money Fractional-reserve banking is the banking practice in which Banks keep only a fraction of the value of their Bank notes and demand deposits in reserve Full-reserve banking is the Banking practice in which the full amount of each depositor's funds are available in reserve at the bank when each depositor Free banking is a theory of Banking in which commercial banks and market forces control the provision of banking services Islamic banking refers to a system of banking or banking activity that is consistent with Islamic law ( Sharia) principles and guided by Islamic economics

A tariff is a tax on goods upon importation. When a ship arrives in port a customs officer inspects the contents and charges a tax according to the tariff formula. Since the goods cannot be landed until the tax is paid, it is the easiest tax to collect, and the cost of collection is small. Traders seeking to evade tariffs are known as smugglers. Smuggling, also known as trafficking, is the clandestine transportation of goods or persons past a point where prohibited such as out of a building into a Prison

Tariffs may be of various kinds:

An ad valorem tariff is a set percentage of the value of the good that is being imported. Sometimes these are problematic as when the international price of a good falls, so does the tariff, and domestic industries become more vulnerable to competition. Conversely when the price of a good rises on the international market so does the tariff, but a country is often less interested in protection when the price is higher. They also face the problem of inappropriate transfer pricing where a company declares a value for goods being traded which differs from the market price, aimed at reducing overall taxes due. Transfer pricing refers to the Pricing of contributions (assets tangible and intangible services and funds transferred within an organization
A specific tariff is a tariff of a specific amount of money that does not vary with the price of the good. These tariffs may be harder to decide the amount at which to set them, and they may need to be updated due to changes in the market or inflation.
A "revenue tariff" is a set of rates designed primarily to raise money for the government. A tariff on coffee imports, for example (imposed by countries where coffee cannot be grown) raises a steady flow of revenue.
A "protective tariff" is intended to artificially inflate prices of imports and "protect" domestic industries from foreign competition (see also effective rate of protection). In Economics, the effective rate of protection is a measure of the total effect of the entire tariff structure on the Value added per unit of output in each industry For example, a 50% tax on an imported machine raises the price from $100 to $150. Without a tariff, the local manufacturers could only charge $100 for the same machine; now they can charge $149 and make the sale.
A "prohibitive tariff" is one so high that no one imports any of that item.

The distinction between protective and revenue tariffs is: protective tariffs in addition to protecting local producers also raise revenue; revenue tariffs produce revenue but they also offer some protection to local businesses.

Tax, tariff and trade rules in modern times are usually set together because of their common impact on industrial policy, investment policy, and agricultural policy. The tax tariff and trade laws of a political region State or Trade bloc determine which forms of consumption and production tend to be encouraged An industrial policy is any government regulation or law that encourages the ongoing operation of or investment in a particular industry An investment policy is any government regulation or law that encourages or discourages foreign investment in the local economy e Agricultural policy describes a set of laws relating to domestic Agriculture and imports of foreign agricultural products A trade bloc is a group of allied countries agreeing to minimize or eliminate tariffs against trade with each other, and possibly to impose protective tariffs on imports from outside the bloc. A trade bloc is a large Free trade area formed by one or more Tax tariff and trade agreements A customs union has a common external tariff, and, according to an agreed formula, the participating countries share the revenues from tariffs on goods entering the customs union. A customs union is a Free trade area with a Common external tariff.

If a country's major industries lose to foreign competition, the loss of jobs and tax revenue can severely impair parts of that country's economy. Protective tariffs have been used as a measure against this possibility. However, protective tariffs have disadvantages as well. The most notable is that they increase the price of the good subject to the tariff, disadvantaging consumers of that good or manufacturers who use that good to produce something else: for example a tariff on food can increase poverty, while a tariff on steel can make automobile manufacture less competitive. Poverty (also called penury) is deprivation of common necessities that determine the quality of life including food clothing shelter and safe Drinking water, and They can also backfire if countries whose trade is disadvantaged by the tariff impose tariffs of their own, resulting in a trade war and, according to free trade theorists, disadvantaging both sides. A trade war refers to two or more Nations raising or creating Tariffs or other Trade barriers on each other in retaliation for other trade barriers

Adherents of supply-side economics sometimes refer to domestic taxes, such as income taxes, as being a "tariff" affecting inter-household trade. Supply-side economics is an arguably heterodox school of Macroeconomic thought that argues that economic growth can be most effectively created using incentives for

1 Economic analysis
- 1.1 Infant industry argument
2 Political analysis
- 2.1 Revenue argument
- 2.2 United States
3 See also
4 References
5 External links

Economic analysis

Some economic theories hold that tariffs are a harmful interference with the individual freedom and the laws of the free market. Economics is the social science that studies the production distribution, and consumption of goods and services. Freedom, or the idea of being free is a broad concept that A free market is a Market in which property rights are voluntarily exchanged at a price arranged completely by the mutual consent of sellers and buyers They believe that it is unfair toward consumers and generally disadvantageous for a country to artificially maintain an inefficient industry, and that it is better to allow it to collapse and to allow a new one to develop in its place. The opposition to all tariffs is part of the free trade principle; the World Trade Organization aims to reduce tariffs and to avoid countries discriminating between other countries when applying tariffs. Free trade is a system in which the trade of goods and services between or within countries flows unhindered by government-imposed restrictions

In the following graph we see the effect that an import tariff has on the domestic economy. In a closed economy without trade we would see equilibrium at the intersection of the demand and supply curves (point B), yielding prices of $70 and an output of Y*. In Economics, economic equilibrium is simply a state of the world where economic forces are balanced and in the absence of external influences the (equilibrium values of economic In this case the consumer surplus would be equal to the area inside points A, B and K, while producer surplus is given as the area A, B and L. The term surplus is used in Economics for several related quantities The term surplus is used in Economics for several related quantities When incorporating free international trade into the model we introduce a new supply curve denoted as S_W. This curve makes the assumption that the international supply of the good or service is perfectly elastic and that the world can produce at a near infinite quantity at the given price. In Economics, elasticity is the ratio of the percent change in one variable to the percent change in another variable Obviously, in real world conditions this is somewhat unrealistic, but making such assumptions is unlikely to have a material impact on the outcome of the model. In this case the international price of the good is $50 ($20 less than the domestic equilibrium price).

The model above is only completely accurate in the extreme case where none of the consumers belong to the producers group and the cost of the product is a fraction of their wages. If instead, we take the opposite extreme, and assume all consumers come from the producers group, and also assume their only purchasing power comes from the wages earned in production and the product costs their whole wage, then the graph looks radically different. Without tariffs, only those producers/consumers able to produce the product at the world price will have the money to purchase it at that price. The small FGL triangle will be matched by an equally small mirror image triangle of consumers still able to buy. With tariffs, a larger CDL triangle and its mirror will survive.

Note also, that with or without tariffs, there is no incentive to buy the imported goods over the domestic, as the price of each is the same. Only by altering available purchasing power through debt, selling off assets, or new wages from new forms of domestic production, will the imported goods be purchased. Or, of course, if its price were only a fraction of wages.

In the real world, as more imports replace domestic goods, they consume a larger fraction of available domestic wages, moving the graph towards this view of the model. If new forms of production are not found in time, the nation will go bankrupt, and internal political pressures will lead to debt default, extreme tariffs, or worse.

Moderate tariffs would slow down this process, allowing more time for new forms of production to be developed.

Infant industry argument

Main article: Infant industry argument

Some proponents of protectionism claim that imposing tariffs that help protect newly founded infant industries allows those domestic industries to grow and become self sufficient within the international economy once they reach a reasonable size. The infant industry argument is an Economic reason for Protectionism. For the protectionist Australian political party from the 1880s to 1909 see Protectionist Party

In a free market economic system, the tariff establishes the borders or boundaries of the system, because as defined by free market economics, the absence of tariffs is a requirement of a free market economic system. The establishment of tariffs create a border of protection around the free market economy, and within that free market area, no tariffs can be established.

The four requirements of a free market economic system, as defined by Ludwig Von Mises, are private property, a coercive government, the absence of institutional interferences within the system, and the division of labor. You wish though because this editing tariff may cause discrepancies among opposing countries.

Political analysis

The tariff has been used as a political tool to establish an independent nation; for example, the United States Tariff Act of 1789, signed specifically on July 4th, was called the "Second Declaration of Independence" by newspapers because it was intended to be the economic means to achieve the political goal of a sovereign and independent United States. The Hamilton Tariff of 1789 (ch 2, enacted 1789-07-04) was the second statute ever enacted by the new United States government.

In modern times, the political impact of tariffs has been seen in a positive and negative sense. The 2002 United States steel tariff imposed a 30% tariff on a variety of imported steel products for a period of three years. The Section 201 steel tariff is a political issue in the United States regarding a Tariff that President George W American steel producers supported the tariff^[1], but the move was criticised by the Cato Institute^[2]. The Cato Institute is a Libertarian Think tank headquartered in Washington D

Tariffs can occasionally emerge as a political issue prior to an election. An election is a Decision-making process by which a population chooses an individual to hold formal office In the leadup to the 2007 Australian Federal election, the Australian Labor Party announced it would undertake a review of Australian car tarrifs if elected^[3]. Federal elections for the Parliament of Australia were held on Saturday 24 November 2007 after a 6-week campaign in which 13 The Liberal Party made a similar commitment, while independent candidate Nick Xenophon announced his intention to introduce tariff-based legislation as "a matter of urgency"^[4]

Revenue argument

Critics of free trade have argued that tariffs are especially important to developing countries as a source of revenue. The Liberal Party of Australia is an Australian political party. Nicholas (Nick Xenophon, originally Nicholas Xenophou, (born 29 January 1959 in Adelaide) is a South Australian barrister anti-gambling Developing nations do not have the institutional capacity to effectively levy income and sales taxes. In comparison with other forms of taxation, tariffs are relatively easy to collect. The trend of lifting tariffs and promoting free trade has been argued to have had disproportionately negative effects on the governments of developing nations who have greater difficulty than developed nations in replacing tariffs as a revenue source.

United States

Main article: Tariff in American history

References

Dominick Salvatore, Introduction to International Economics (2004)
Taussig, F.W. "Tariff," Encyclopedia Britannica (11th edition, 1911) vol 26 pp. 422-27.
Free Markets And Tariffs

External links

Tariffs in American history have played different roles in trade policy and the Economic history of the United States. The 'General Agreement on Tariffs and Trade' (typically abbreviated 'GATT' was the outcome of the failure of negotiating governments to create the International Trade Organization (ITO This is a list of Tariffs and trade legislation List of tariffs in Canada List of tariffs in United States This is a list of International trade topics. Absolute advantage Agreement on Trade-Related Aspects of Intellectual Property Rights An import quota is a type of protectionist Trade restriction that sets a physical limit on the quantity of a good that can be imported into a country in a given period A trade barrier is a general term that describes any government policy or regulation that restricts International trade. In international Commerce and politics, an embargo is the prohibition of commerce Excise or Excise tax (sometimes called an excise duty) is a type of Tax charged on goods produced within the country (as opposed to Customs duties In Economics, the effective rate of protection is a measure of the total effect of the entire tariff structure on the Value added per unit of output in each industry A telecommunications tariff is an open contract between a telecommunications service provider and the public filed with a regulating body such as a Public Utilities Commission The Swiss Formula is a mathematical formula designed to cut and harmonize Tariff rates in International trade.

Dictionary

-noun

a system of government-imposed duties levied on imported or exported goods; a list of such duties, or the duties themselves
a schedule of rates, fees or prices
(UK) a sentence determined according to a scale of standard penalties for certain categories of crime

-verb

(transitive) to levy a duty on (something)

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