I just use the old terminology of direct and indirect taxes.
The tariff is a direct tax on a product ( based on the Customs Valuation Code) The tariff can be ad valorem (CIF or CAF) or quantitative per unit. There have been a few trade disputes on valuation for customs purposes.
An indirect tax is imposed on the purchaser at point of sale, usually as a percentage of the sale price.
Excise is also an indirect tax but can be calculated differently . It is usually levied at the border for imports, in accordance with trade rules on border tax adjustments. IIRC VAT/GST are also levied at the border for imports and passed through to the ultimate consumer.
There are WTO rules on border tax adjustments for the purposes of distinguishing between tariffs and excise/sales taxes levied at the border , in the context of the application of GATT 1994 Articles I, II, and III
The international traders on Blitz could explain the practices on point of levy and customs valuation.
A GST is ultimately paid by the end consumer - everyone else that pays GST prior to the end user gets an input tax credit for any GST paid.
So if an importer pays GST when the goods enter the country and then the goods are onsold, the importer of the goods gets a tax credit for the GST paid at the border. Ultimately the GST is paid by the end user/final purchase of the goods (the end consumer cannot claim an input tax credit for GST paid).
If you buy goods online overseas for your own consumption and get the goods delivered to Australia then you generally pay GST at the time the goods clear customs - but only if the item is above $1,000 (generally no GST for items below $1000 purchased overseas).
The US has claimed that the GATT 1994 rules on border tax adjustments are unfair and favour imported goods over domestic goods, particularly those goods from countries with GST/VAT systems. The US has failed to negotiate changed rules.
The relevant rules provide for exemption from indirect taxes on exports, under the destination rule for the application of indirect taxes.
Under our old WST system our own domestic producers complained that they were disadvantaged because of a cascading effect of about 5% on the wholesale price of domestic product. That got sorted through some sort of rebate scheme that the ATO fixed and Treasury agreed to in the last Keating Government. From memory the 5% was exaggerated and the total rebate cost of the scheme was $500 million.
As the US Feds donât have the sales tax power, they canât fix the problem the way we did before we moved to a GST under Howard ( and got slugged with a tax on services on top of that)
With tariffs pending on agricultural products, I look forward Trumpâs press secretary telling us if we wish to avoid tariffs, we should move our cows to the US.
Just move your manufacturing to an Australian place with an iconic US name. Given their lack of geographical knowledge, Iâm sure they wouldnât know.
Texas
Dallas
Miami Beach
Waikiki
Hampton
Melbourne!!!
Haha. The US dairy sector is so heavily protected that we have to compete with others for some Mickey Mouse TRQs on butter and cheddar. And itâs frustrated by US definitions of butter and cheddar.
We once found a loophole in product descriptions which would allow us to flog some whey powder ( or something like that). However technical measures at US State levels blocked that.
If the US wants to keep banging on about unfair trade by others ( the EU is currently in its sights) we could draw up a huge list of unfair US trade barriers. It would have a long product list ranging from boats ( the Jones Act) through to just about any agricultural product.
And now Trump has thrown recourse to the 1798 Enemy Aliens Act in the mix as a weapon ( although Rubio deflects that it is a matter for the DHS portfolio, border force stuff to get rid of those enemy illegal aliens, including all those students protestors)
Maybe it was an urban myth. But I was told after ww2 the Japanese had a place called USA and sold stuff from there, to avoid people being turned off with made in Japan.
If you consume a product that has the government taking a slice of the action well on my definition thatâs a consumption tax. Noones paying the tariff if no one buys the goods.
Someone does if the goods are purchased.
As opposed to an income tax which you have to pay when you earn an income.
Iâm being factual - a consumption tax or GST places the tax burden on the end user âŚ.ie when a good or service is finally consumed. Everyone along the supply chain gets an input tax credit fir any GST paid so that it pushes the GST burden to the final consumer of the relevant good or service. It means the GST is charged on the final consumption price.
Itâs very different to a tariff which is a static tax paid on point of entry into a country based on the landed cost. The trigger for a tariff is not an end consumer buying the goods, itâs triggered by the goods entering a country.
When a business sells goods or services assuming itâs profitable then it generates an income (taxable income). So the business would pay income tax on the profit it makes from the sale of goods. That sale of goods would also incur GST. So the sale of goods (purchased by the customer) does generate income tax because it results in taxable income.
Your point above says the sale of goods does not incur income tax. The opposite is true.
