TARIFFS ARE TAXES TOO!
#LSN_Opinion Consumers of tariffed products face higher prices on both domestic and imported goods
TORONTO, ONTARIO July 2, 2018 (LSN) Liberals are famous for their “tax and spend” proclivities. The spending habits of the Justin Trudeau Liberals have cornered them into needing to mine ever more tax revenues from Canadians. To borrow from the phrase “revenue tools”, made infamous by Kathleen Wynne, Trudeau’s “tool makers” have been busy since Justin was elected.
“The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.” (Quote from Louis XIV'S Finance minister, Jean-Baptiste Colbert under Louis XIV of France). Justin seems to be following Colbert’s advice and scheming of new ways to pluck our feathers under the “tariff” category of tax collection and the NAFTA ‘tariff opportunity’. An unfortunate, and likely unintended consequence of his recent tariff announcements is to ruffle the feathers of hundreds of millions of citizens on both sides of the US and Canadian borders.
Why all this squawking and hissing over tariffs?
Consumers of tariffed products face higher prices on both domestic and imported goods. Increased competition generally results in lower prices, but tariffs serve to decrease market competition. Tariffs often arise from the successful efforts of industry lobbyists who convince elected politicians to tax imports. These lobbyists act at the behest of domestic producers (and allegedly the jobs of their employees) who seek protection from foreign competitors who may have a price and/or quality advantage. Consequently, consumers are the losers where retail prices are concerned in tariff-protected product categories.
There are two tariff winners: the domestic producers being protected; the government that mines new tax revenues.
Our domestic producers gain a price advantage over the foreign producers who must sell their wares to consumers at higher, duty-elevated prices. The duty, aka ‘tax’ or ‘tariff’, is charged to the foreign producers as their products enter our markets at the border.
Here’s a real life example of “tariff harm”. My friend, an elevator repair man, just received notifications from all of his suppliers that their prices have increased on the heels of Trudeau’s tariff announcement on imported steel and aluminum products. He must pass these increases on to his customers - developers and property managers. In his words: “Tariffs just made housing less affordable.” How many other past government actions can be traced to cost-of-living increases to consumers, labelled nebulously as “inflation”, then wrongly blamed on the businessman?
Finally, our consumers also lose in another way - choice.
Question: how many imported products do our consumers fail to see on our retail shelves simply because import tariffs are too high for foreign producers to justify the effort to enter our markets?
Answer: I guess we’ll never know.
Gene Balfour
Chairman, Ontario Libertarian Party