Tariff Protection Taxes
|March 3, 2005||Posted by Staff under Archive, Progress Report, The Progress Report|
Tariff Protection Taxes
Consumers Get Raw Deal
Below is the text of a radio broadcast by the Justice Party in Australia. The concepts apply everywhere.
Consider how a tariff operates. Suppose that you require certain goods, and that they can be obtained for overseas at a price of 100, while a local manufacturer cannot sell them at less than 130. Then a pressure group induces the Government to impose a customs duty on the imported article so that its final cost to you is 150. No doubt you will buy the local product for 130 instead of paying the 150. Note that it is you, the consumer, who pay the tariff, and not, as we are often told, the foreigner.
[Meanwhile, the domestic producer is not encouraged to improve, to upgrade, to better compete with the foreign producer. Instead, the domestic producer becomes flabby and dependent on government handouts.]
From the national viewpoint it is the burden on our primary industries which forms the most serious effect of those high tariffs which in many cases encourage uneconomical and inefficient secondary industries. Labour and materials are diverted to our sheltered secondary industries when they could be more profitably utilised in our rural industries.
But it is not only primary producers who are exploited by the tariff. In the year 1951-52, 100 million pounds were collected by the Australian Government in customs duties, but this does not by any means represent the total taken from the pockets of you, the consumers. Wholesalers and retailers must make their profit on the tariff taxes, while local manufacturers take advantage of the tariff and exchange to raise the price of goods that they produce in Australia. Actually, it has been estimated that with tariff taxes, for every 4% taken from the consumer only 1% reaches the Government Treasury. The time for revising this inefficient method of collecting revenue is long overdue.
Remember, that before any Customs duty is imposed, 25 per cent. exchange is added to invoice price; then after the tariff tax there is, in many cases, primage tax. In addition there are overseas freight (about 15 per cent.), insurance and other costs. No wonder the purchasing power of consumers is diminishing! We are often told that Protection is Australia’s settled policy, but unless we are careful, Protection will have “settled” Australia.
Cordell Hull’s words are terribly true. “If goods are not allowed to pass frontiers, sooner or later armies will.” It is time that we grasped that this globe is fundamentally one world, and that total economic self-sufficiency is both impractical and undesirable.
The Justice Party stands for the progressive reduction of tariff barriers which benefit only a privileged minority, which exploit the vast majority of consumers, which often entail serious economic inefficiency, and which not only promote ill-feeling but indeed sow the seeds of war among the nations.
— G.A. Forster
Free trade means removing special privileges. Nowadays, so-called “free trade” is often a code word for protecting special privileges! We need true free trade. What’s your opinion? Tell your views to The Progress Report!