Meaning of Tariffs
This could be referred to as taxes imposed on goods that come from other countries into a particular country, tariff is one of the direct taxes imposed on commodities. It is also known as import duties.
Reasons for Imposition
Some of the reasons are:
1. Source of Revenue: To get most income into government purse, taxes are imposed on goods coming in from other countries.
2. Avoid Dumping of Goods: Dumping refers to a situation whereby a country, sells her goods to another at a price lower than the price sold in the home country, this normally occurs when goods are produced in excess.
3. Protection of Infant Industries: If not properly checked, there will be negative effects on locally produced goods. To protect newly established industries from total and premature collapse, the imposition of tax has to be made to curtail excessive demand for foreign-made goods.
4. Reduction of Unemployment: The imposition of tariffs discourages importation and encourage infant industries to survive which will create jobs for more unemployed people.
5. To Improve Standard Living: To help the citizens of a country to be self-sufficient and self reliant.
6. Balance of payment deficit: It helps to correct a country’s balance of payment deficit in the long run.
7. Trade restriction: Trade restriction or imposition of tariffs enables the citizen to consume more locally made goods instead of foreign goods.
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