Thursday, June 19, 2008

This Little Tidbit Is Being Ignored!

Everybody is talking about the carbon tax, whether it will be revenue neutral or not. But this little tidbit is being ignored, and it's a huge tax grab. From page 40 of the Liberal green plan:

So, they will impose a tariff on all goods not being carbon taxed. Sounds good, now those goods from China will not have a price advantage when entering Canada. They will be taxed on entry.

Let's step back and look at how tariffs work. I know this is boring, but most people think tariffs are good for domestic consumers and producers, not true, consumers lose. Here is a really good article on the softwood lumber tariff, it clearly shows that both countries lose, that consumers lose, and the only ones who gain are governments.

The Economic Effect of Tariffs

In almost all instances the tariff causes a net loss to the economies of both the country imposing the tariff and the country the tariff is imposed on.

Impact to the economy of a country with the tariff imposed on it.
It is easy to see why a foreign tariff hurts the economy of a country. A foreign tariff raises the costs of domestic producers which causes them to sell less in those foreign markets.

The Effect of Tariffs on the Country Imposing Them
Except in all but the rarest of instances, tariffs hurt the country that imposes them, as their costs outweigh their benefits. Tariffs are a boon to domestic producers who now face reduced competition in their home market.

There are costs to tariffs, however. Now the price of the good with the tariff has increased, the consumer is forced to either buy less of this good or less of some other good. The price increase can be thought of as a reduction in consumer income.

Since consumers are purchasing less, domestic producers in other industries are selling less, causing a decline in the economy.

What this means is that the Liberals are hoping to tax us through a carbon tax, AND impose tariffs on all goods not already carbon taxed in their own country, raising the price of those goods and making the consumer pay more at home. Dion also mentioned a cap and trade system.

We lose with the carbon tax, and we lose with the tariff. Who wins?? The government.
This is exactly what PM Harper stated today, any politician proposing a tax, is just trying to fill government coffers. This needs to be restated over and over until the consumer gets it.


jad said...

The other problem with imposing a tariff is that it will likely be in contravention of WTO rules, not to mention the various trade agreements we have signed over the years with many countries.

The Liberals are banking on the US imposing a carbon tax when (if) Obama becomes president, but he has to deal with all those guys in Congress. Anyone remember when Bill Clinton tried to agree to Kyoto, and the Senate voted virtually unanimously (Democrats and REpublicans) against it ?

Also, they should remember that there are THREE countries in NAFTA, and Mexico may not be willing to accept a carbon tax tariff.

Anonymous said...

The Nutty Professor and his gang of social engineering pickpockets have failed to explain one tiny little detail re the imposition of tariffs on imported products: what does the WTO say about these types of tariffs?
I'll bet you dollars to donuts that any such tariff implementation is illegal and will result in countervailing tariffs being applied against us. Just what we need, an international trade war at a time when Canadian manufacturing is barely staying afloat due to increased energy costs.

wilson said...

If Dion says these tariffs will stop jobs leaving Canada, he may be right, the Canadian companies will have to close down due to being non-competitive.
So no jobs leaving Canada anymore, because the companies went bankrupt.