Border Tax Adjustment

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Border Tax Adjustment

A tax to which domestically produced goods and imports are subject but from which exports are exempt. Border tax adjustments are intended to encourage exports while not making imports excessively competitive against domestic goods. This may be seen as a barrier to trade.
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recommendations of the 1970 Working Party on Border Tax Adjustments to
approach based on the four criteria set forth in Border Tax Adjustments,
5) Although ecotaxes are currently in place, to establish a norm of environmental respect worldwide, the World Trade Organization (WTO) should implement border tax adjustments (BTAs) on exports manufactured using inefficient energy technologies.
132) Border tax adjustments would affect change by incentivizing non-carbon-taxing nations to become more environmentally responsible and help current carbon-taxing nations establish an equal footing in the global market.
WHY BORDER TAX ADJUSTMENTS ARE PROPOSED IN CONJUNCTION WITH
Border tax adjustments have long been proposed in conjunction with
For example, many countries have discussed using border tax adjustments (BTAs), an import tariff targeting pollution-intensive goods, to level the playing field between countries that impose little or no tax on such goods and those that impose high taxes.
The study explores several mechanisms, such as border tax adjustments, that could be used to mitigate these effects, and finds that while such measures can be successful at reducing competitiveness impacts, such protection is likely costly to both the wider economy and the environment, and ill prepare Canada for a long-term future with significant carbon pricing.
2) Is policy to alleviate the effects on competitiveness, such as border tax adjustments or exemptions from cap-and-trade limits, warranted and in what situations?
TABLE 4 Energy Sector and All-Economy Impacts under Alternative Carbon Mitigation Price Signal Only Global Domestic Trading Market reforms No No Tax shifts No No Contribution from trading None Unlimited Sinks None Full Border tax adjustments, fossil Yes Yes fuels Border tax adjustments, other No No industries Domestic carbon price, $/tC 230 33 International carbon price, $/tC 33 Economic efficiency of climate policy GDP impact rel.
In fact, the inability of a VAT to cure the trade deficit was reaffirmed by the Joint Committee on Taxation in its May 30, 1991, report ("Factors Affecting the International Competitiveness of the United States"), in which the committee concluded that border tax adjustments provide neither incentives nor penalties for international trade.
The strong emphasis at the outset on border tax adjustments, which usually are permitted for indirect taxes but not for direct taxes, highlights an important point.