Export, import duties - this is one of the methods of regulation of economic relations used by the state. The customs tariff is used most often in reducing imports to protect local manufacturers from outside competition. There are also situations where a reduction in exports is required.
The export duty is imposed on domestic goods exported outside the borders of the country and sold by third parties. It is also worth noting the implementation of political and fiscal functions.
Customs Tariff Role
Due to the fact that this duty belongs to the value category, analyzing the use, you can apply the methodology that is proposed for the general study of the duty. The criterion for the dominance of specific functions is the ratio between world and national values for the selected product. The export of goods begins with a positive ratio in favor of the cost of the local manufacturer. Export customs duties acquire a protective characteristic when the difference between the prices is exceeded. When based on the difference between world and national prices, fiscal action prevails. If the rate becomes insignificant, in comparison with the division of available prices, then this measure acts as a regulator of export operations.
When and how is export duty used
To protect the domestic market, several applications are used. It is advisable to use the export tariff if the cost of a particular product is controlled by the state and is below the world level due to subsidies. The state considers export restrictions as necessary actions to normalize high supply in the domestic market and prevent excessive export of subsidized goods.
The tax of some states is determined for a specified period, most often with a lack of raw materials. Thus, a barrier is formed for the export of a raw material product outside the country, since the high cost of exports affects competitiveness. Due to this, domestic processors acquire additional opportunities due to the expansion of the field of obtaining raw materials and price stability in the market due to the lack of export operations.
Benefits for the state
Naturally, the authorities may have an interest in determining the tariff for export, especially if there is a need to increase budget revenues. Export duties are much more common in countries with a substantial portion of gross domestic product sold on the world market.
If the state, when exporting products, has monopoly rights to determine the commodity value, it may apply customs duties for personal interests. Their size is proportional to the number of importers, depending on the supply of goods. The taxation is often influenced by the state’s monopoly position, which is why other countries are forced to overpay for imported products.
Duty and Economics
An export tax has also been introduced to combat inflation. A greater amount of foreign exchange earnings has a positive effect on the balance of payments, which affects the stability of the national rate.
The redistribution of income within the state is also one of the reasons for using the duty. This is due to the use of tax on the export of monopoly products. An example is the cocoa duty in Ghana.Also, the application is justified with a general increase in oil prices and the favorable development of the foreign market.
Policy Impact
The export duty also has a trade and political role, expressed in the fact that a country with its help is able to influence the political situation. A striking example is the relationship between Ukraine and Russia. As long as Ukraine does not have an alternative option for acquiring energy, in this direction the tariff policy of the Russian Federation will have a significant impact. It should be noted that most often countries with transition economies and developing countries use the export tariff. In developed countries, it is used in rare cases, there are also states in which such taxation is prohibited at the legislative level. In such cases, the emphasis is on non-tariff regulation methods.
If there is a customs barrier in the way of exported products, manufacturers experience more difficulties in ensuring the required level of income from exported operations. Stopping sales is also possible if the rate of export duties is greater than the profit from the proposed transaction. So, when specifying the level of the tariff, a comparison of income and rates should be made to make profitable trading operations.
