Case Study Qnt 561 Week 3 Tax Trouble

QUESTION 3

Tax trouble

1.Ad Valorem Tariff

• An Ad Valorem Tariff is an import duty that is charged as a fixed percentage of the cost of one unit of the goods. Therefore, accurate documentation reports on the part of the Importer of Record are important, as the import duty is charged as a percentage of the monetary value of the good.

• Reason for using this tariff is to be able to adjust the tax burden according to the amount the traders spend on taxed item, also to avoid discrimination of specific rates against the low-priced varieties of commodities, and to stimulate government revenue

• For example, The US currently levies a 2.5% ad valorem tariff on imported automobiles. Thus if $100,000 worth of autos are imported, the US government collects

After the Tiananmen Square massacre in 1989 both the EU and US announced an arms embargo with the world’s most populous nation

7.export subsidies

• Government payments, economic inducements or their financially quantifiable benefits provided to domestic producers or exporters contingent on the export of their goods or services

• when the government subsidies local producers they can compete in the international market

• example of an export subsidy is the one offered by the Indian government.

India, the world's second biggest sugar producer, announced in 2015 that it would introduce a subsidy for raw sugar exports, this involves offering export incentives for 1.4 million tonnes of raw sugar as mills start sales of surplus sugar overseas to pay cane farmers.

Increased

emerging markets, by making emerging markets stronger helps the developed countries or economies over time, in the end it creates new and affluent customers for everyone

Disadvantages

1. bound to exploit small economies. This agreement will not consider small economies well-being and moreover this agreement will halt the success of small nation to prosper further

2. very complex, making them difficult and time consuming to negotiate. Sometimes the length of negotiation means it wants take place at all

3. the details of negotiation are to trade and business practices, meaning the public often misunderstand them, they get a lot of press and protests

4. common to any trade agreement, some companies and region of the country suffer when trade borders disappear. Smaller businesses can’t complete with giant multi-nation. They often lay off workers to cut cost.

Question 4.2

Advantage of bilateral and regional trade agreement

1. Bilateral and regional trade agreements increase trade between the two countries. They open markets to successful industries. As companies benefit, they add jobs

2. They are easier to negotiate than multilateral trade agreements since they only involve two