We have recently seen the United States try to protect their home industries by imposing tariffs on imported steel and aluminium, which has sparked a furore about trade wars and their malignant effect on world trade.
Perhaps there is a better way of achieving the same objective. Tariffs are imposed when someone is trying to use an unfair advantage, but they can be a bit of a blunt instrument, and maybe some other sort of leveling measure would be just as effective. Instead of taxing the commodity, why not tax the distance it has to travel? What comes to mind is an unnecessary transport tax (utt), which would work as follows:
If a commodity such as steel can be supplied locally at something like the world price then that local supply should be encouraged to be utilized. This could be done by requiring that if any user of that commodity wishes to import the cheap foreign stuff, then they would be obliged to pay UTT on those imports. The rate of UTT will be applied by quantity, and the extra distance that the commodity has to be transported from its source. So, for example, if a car manufacturer in Detroit could buy steel from a US steel plant , which is X miles away, but chooses instead to buy it from a plant in the Far East, which is Y miles away, then they will have to pay a tax per ton on Y – X miles of unnecessary transport. The rate of tax will be set so as to make it uneconomic for the steel to be imported from overseas. If, however, local steel mills are running at full capacity and demand still exceeds supply, then foreign steel could be imported free of UTT because the transport is not unnecessary in such a case. This would also apply to most UK steel exports to the US as they are usually specialist steels that the US doesn’t produce itself so could not be sourced locally.
This tax can be applied, at appropriate rates, to many different commodities on a case-by-case basis as necessary. UTT will probably work better than a tariff put on a commodity because it taxes the extra distance that the commodity is transported, not the commodity itself. It would also take into account the availability of the commodity locally. It is also flexible, as it can be adjusted to suit the economic conditions at the time, and because it is a national tax, instead of a tariff, it may be easier to get it past the WTO without rocking too many boats.
The imposition of this tax can be justified under the green agenda that seems to be dominating everything these days. It should be seen by the environmentalist lobby as a means of cutting the pollution caused by long sea voyages or air freight flights, and should send them into raptures. The transport industry will not take kindly to this tax, but somebody has to lose out and they will just have to lump it. Nations would also have to realize that other nations may well reciprocate, and everybody would have to weigh up whether it is to their national advantage to apply this tax in each different circumstance. The beauty of this tax is that it can be applied selectively, and the decision whether to apply it or not will be taken by national governments on a case-by-case basis.
Nobody wants to go back to the days of trade wars and excessive protectionism, but nations with higher living standards must be able to protect themselves from those with other advantages such as very cheap labour. Free trade is a Holy Grail to be aspired to, but we have to live in the real world and things are not that simple in the real world.
This is an outline of a very much a simplified version of the concept of a UTT, and there will doubtless be numerous problems in the fine detail of implementing such a tax. However, the concept of UTT is very flexible, and if it is applied gradually to just one commodity at a time, the pitfalls could be identified as they appear and rectified before the tax is applied to any other commodity. Steel is a commodity most in need of help at the moment, and it would be a good commodity to try UTT out on. If it turns out to have too many disadvantages then it can be easily scrapped, but if it is effective in its objective of keeping home industry viable, it can be applied to other commodities for their benefit.
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UKIP needs a few people with business knowledge. The future for Britain can be increadible. Ask a proper Businessman like Digby Jones and others. Not bankers, or government constructs or union leaders. We will need setting free of the towering heaps of EU regs and rancid rights designed to reinforce the customs union, and being used to spread this stuff around the world to give the EU some assumed and illusory legitimacy ( aided and abetted by our very own Mrs May ). If you can’t find Digby Jones, ask prof Bogdanovich ( My apologies if i’ve got it wrong ). He may not be in business but he understands the Macro of business. Which most economists do not.
Consider the dungheaps of Human Rights, supply chains, Just in time, Human Resources, agencies, Project management, Compliance, Data Protection and other ephemera. These should disappear to free people who actually do things to be Brunel. To make sense of our transport and other things. the man who beat unions ,management and bankers to design the Mini.
Dear God I’m fed up ! I’m not as brave and a lot older but I think I know a little of how Tommy Robinson and AMW feel.
The collected works of t g spokes can be found in the garbage.
Phillip We will soon see if Trumps tariff on cheap steel is effective in protecting American jobs. If so then it will surely be copied by other countries. I don’t buy the story that we will all be impoverished if we all start to produce food/goods nearer to where they are consumed and agree with your line on its ‘green’ credentials.
Lets face it globalisation , so far, appears to create a plethora of billionaires, encourage economic migration from poor to richer countries compressing wages of low income workers in the West, encourages moving production overseas with the loss of blue collar jobs and creates corporate behemoths who do not appear to pay much tax. To sustain globalisation Western governments have to borrow more and more to fund their ever growing welfare sectors.
There are signs that Western governments accept that the whole economic model needs to change and indeed corporations need to pay a fairer share of tax. They can’t go on socialising losses and privatising all the gains.
Jake,
I think you are probably right about all except the last two sentences. I think you hold a common misunderstanding. We have a cynical ploy by our overlords to tax the workers. Carried out by the employers as painlessly as possible for the worker by using PAYE. The company collects it all together and gives it prepackaged to our overlords. So they are unpaid tax collectors…….Our overlords Cynical & Clever as always.
But it does not end there by a long chalk, There are now all the hidden taxes and the huge taxes and the snide little regulations and unnecessary foolishness of the many distractions from actually making a tiny tiny bit for the owners and people who paid for this business to exist. Total taxes usually about 75 % Total profits rarely over 5%
This is very complex, cynically disguised, and much kept off the balance sheet. It doesn’t bear too much thinking about.
More easily dealt with by just applying out national standards rigorously so excluding the crap. Taxation is already far too complicated and any new tax would just facilitate even more squandering.
Apart from me, is there anyone out there who does not want to TAX everything and anything?
(In the last Government there was even a minister for new TAXes – Vince Cable).
Drawbacks of your, ‘yet another TAX, TAX, TAX’ policy.
– how much will this take to administer – plus VAT? We shall need a Government software system (doomed to hacking and thousands of millions of pounds failure) to track all this – plus the computers and ‘highly trained’ operators. An vast army of administrative Civil Servants whose main job will be to slow down or cease trade. (If there is nothing to do, they are out of work). And then there are the inspectors – of shipping, of lorries and so on.
– As the crow flies? In the North of this EU Country, we are closer to Norway than say Sheffield. No one in his right mind would get steel from Norway. Think again Dick TAXington.
– And Minister, your wife has an ailing steel plant, here’s a bung to say we need an exemption, this is of course a specialist product we cannot produce, except at her plant and blah, blah, blah, . . .
– And by the time the wrangle with some petty functionary, it more than my jobs worth to allow this legitimate item into the country, . . .
No, I have not missed the point. It is not me that has subverted this speech:
We shall TAX them on seas and oceans, our growing confidence and growing strength in the air, we shall defend our EU Island by TAXation, we shall TAX them on the beaches, we shall TAX them on the landing grounds, we shall TAX them in the fields, we shall TAX them in the streets, we shall TAX them in the hills and
. . . we shall never surrender this ability to TAX everything and anything.
The problem Biscotte, is terminal. We already have taxes that tax taxes that tax them. And taxes disguised as non taxes, and allowances against non taxes that tax.
They are mostly only paid by companies. So Joe Public never knows. Except when his employer goes bust. And up goes the cry ” put him in prison ” or worse ” Where’s my pension “. Heart rending stuff.
The Institue of Directors Need to Say ” Collect your own taxes, We’ve stopped doing your dirty washing ”
On top of this heap of poison there are Institutions, Quangos, Disguised Entities , NGOs, etc that purport to offer services. like driving licences, passports , There’s thousands of ’em.
The trouble is .you need to be an accountant to find ’em, and they are protected by gov’t.
And this corrupt deal is why we lose our companies abroad ( Pure incompetence) .
I believe. Our Government actually hates us.
Nice try.
But explore the law of unexpected consequences.
The agressors in this case are and have always been for, the last 70 years, the EU.
Various bodies have tried to take action. But as always with politicians, nothing ever happened. The agressors roll on , not even pausing for the bribery which is all politicians ever offer.
The Us are merely responding to trade wars being started andpursued by EU, China et al. And as for the EU support for the Turkish Steel industry. They are just taking another Hitlerish step forward in agression. Don’t look Mr Chamberlain.