State Government Levy Tariffs on Imports Why not have State

State Government Levy Tariffs on Imports

Why not have State governments levy tariffs on imports, or tax other states\' products. Would this be a sensible way to raise revenues? What are the advantages/disadvantages? Provide research support for your positions

Solution

Tariffs usually have both a revenue effect and a protective effect, but some tariffs are for revenue only. A tariff refers to a tax imposed on products and services By raising tariffs, price of imports increases leading to a decrease in consumer surplus. Tariffs are used to control trade, because they increase the price of imported products, making them more expensive to the end consumers Tariffs may make local industries less efficient due to reduced global competition. Exporting countries may counter with their own tariffs on imported products. We should have to compromise on the quality of goods and services as industries look for ways to cut production costs. Governments may also impose tariffs to protect local industries from foreign competition The objective behind tariffs is to decrease demand for imports while increasing demand for domestic products. Tariffs provide additional sources of income for the imposing country at the expense of consumers and foreign producers. Tariffs on imports encourage expansion in various sectors. The United States government collects tariffs on imports; however, it does not collect tariffs on exports, as this practice is prohibited by the U.S. Constitution. If tariffs become excessively high, they can curtail all importation of a product and thus lose their revenue-raising effect. Tariffs that increase the cost of lower-priced similar imported goods and thus protect domestic producers, encourage more production, and create jobs, would appear to be very advantageous. However, this is not the case. Such tariffs cause the consumer to pay higher prices for the particular product protected by the tariff. Thus, the cost of the additional jobs created may be very high per job. Whereas levying tax on other state\'s product is also a revenue source but less when compared with levying tarrifs