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The Forum > Article Comments > Free trade from tariffs > Comments

Free trade from tariffs : Comments

By David Leyonhjelm, published 12/1/2015

Many believe we now only have tariffs on cars and clothing. In fact, we impose tariffs on nearly all categories of imported products, in an absurd and scattergun way.

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These Tariffs are there to support Australian Industry. Those with Tariffs protect Australian jobs those without are deemed not in need of protection.
Posted by ponde, Monday, 12 January 2015 8:11:12 AM
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Tariffs are without doubt the most efficient, easiest & cheapest to collect & police form of tax available to any country.

Not only that, it is about the only form of tax public will be in favour of when increased or introduced. They are right too, tariffs help generate jobs.

Mucking around with GST rates to find the money to cover Labors waste will require huge enforcement bureaucracy, & will net peanuts compared to a 5% across the board tariff, & will still be avoided by many. Tariffs on the other hand are paid by all, & totally unavoidable.

It is a measure of the stupidity of politicians that we ever reduced, or eliminated so many of ours.

Sorry David, you've got this one way wrong.
Posted by Hasbeen, Monday, 12 January 2015 12:14:34 PM
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Free Trade Agreements are wrong because they bind even future generations which may not agree. But given that 75% of goods already carry no tariff and given the crazy cost of administering the remaining 25% and given the degree of harassment experienced by importers, the way to go is to change tariffs from being a legal duty into being a moral duty which is shameful to avoid.

In other words, make tariffs voluntary.

Have a web-site where purchasers of imported goods can easily find the appropriate recommended tariff on what they bought and pay online, either anonymously if they so wish or otherwise receive a certificate for their payment.

This can bypass and defeat any free-trade-agreement!
Posted by Yuyutsu, Monday, 12 January 2015 1:53:39 PM
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Why don't we have an honesty system for Income tax as well.

This is the tax rate for this year - pay it only if you are morally willing to do so??

LOL
Posted by ponde, Monday, 12 January 2015 2:08:40 PM
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AIUI the reason why "when you paid for Christmas lunch, there was a tariff on the ham but not the turkey" is that the latter is a prohibited import for quarantine reasons.

I agree we should get rid of far more tariffs, but unilaterally abolishing them all is not the best way to do it, as the cost of our being denied free access to markets is also high. Bilateral (and better still, multilateral) agreements are better, and we need not approach each country individually. We could have a standard agreement open to all who are interested, and if they want to vary it, they can approach us.
Posted by Aidan, Monday, 12 January 2015 2:29:04 PM
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Hasbeen,
<<Tariffs are without doubt the most efficient, easiest & cheapest to collect & police form of tax available to any country.>>
That's what I used to think in the early 1990s. But then I realised that:
• They're extremely unfair to the world's poorest as the people are denied a fair return for their efforts.
• They raise the cost of supply, so all our businesses end up being less competitive.
• The businesses they benefit are the ones that we're uncompetitive at anyway.
• If we abolish tariffs then our dollar could be lower (making all our businesses more internationally competitive) without general price levels being any higher.

It's much better to focus on what we're good at than to try and protect the industries that we're bad at. Admittedly there is a third category: things we're bad at now but could be good at in the near future; hence the gradual unwinding of tariffs by past governments. But that's mostly finished now, and in the long term there is no good reason to keep tariffs.
Posted by Aidan, Monday, 12 January 2015 2:50:52 PM
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"They are right too, tariffs help generate jobs."

Only if you assume we don't export anything.

and by jobs I assume you mean here in Aus ? because the countries we import from, their citizens are unimportant of course.
Posted by Valley Guy, Monday, 12 January 2015 3:12:30 PM
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If some of you people had any idea of the world, it would help. I have mentioned the facts on here before, but here it is again.

I had to go to importing brass products, because I couldn't compete with imports.

I had product produced to my design, made to my specification, chrome plated, assembled & packaged with my logo, ready to sell. These products, including all freight & importing costs, arrived into my store for just a little more than HALF the cost of the raw brass to make them here in Oz.

This is particularly galling when you consider the copper & zinc the Asian brass is made from is imported from Australia.

There is a great deal of subsidy going on in our competing countries. Being good at something doesn't work against their national interests.

With your attitudes the only employers left will be government. A quick glance at the numbers of useless bureaucrats employed by the previous Commonwealth & Queensland Labor governments indicate, this is Labors plan for our future.
Posted by Hasbeen, Monday, 12 January 2015 3:55:28 PM
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Aidan
I agree with most of your posts, but surely your own logic suggests we should abolish tariffs unilaterally? The idea of continuing to shoot ourselves in the foot because it may prove a bargaining chip seems a bit daft
Posted by Rhian, Monday, 12 January 2015 4:00:04 PM
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Rhian,
Abolishing tariffs unilaterally would be much better than doing nothing, but those aren't the only two options. It's not some hope that they can be used as bargaining chips; they are already being used as such, and the game is in session.

Hasbeen,
Even with tariffs it would be difficult to compete with the Asian brass manufacturers for the small domestic market, with buckley's chance of doing so in the large international market, so why bother? Instead we should do what we're genuinely good at, such as mining copper and zinc. If we keep monetary and fiscal policy set to prioritise employment, everyone in Australia can work on something worthwhile instead of doing low value jobs and forcing the public to pay a high price for the results.
Posted by Aidan, Monday, 12 January 2015 5:00:39 PM
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Aidan Africa & Asia can mine copper, zinc, coal, & iron ore cheaper than we can, & damn soon will be doing a lot more of it.

Already exploration budgets for Oz have been slashed, & numerous projects have been put on hold. The Oz cost of labour is slowly killing that golden egg laying goose.

Just what do you expect us to be good at, in sufficient volume, to replace the mining jobs as the current mines run down?
Posted by Hasbeen, Monday, 12 January 2015 8:53:47 PM
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Hasbeen, there are many things we're world leaders at, from food production to field robotics. And despite your claim, mining has a bright future in Australia, thanks to a combination of large amounts of high quality ore, automation, and innovation in the refining process. Automation and innovation also means we can succeed in high value manufacturing. And though electricity is currently expensive here, I expect that to change as we take advantage of our abundant solar energy to attract energy intensive industries here.

The recent drop in metal prices is down to a cyclical decline in the global economy. They will be back up soon, and go even higher as more countries industrialise.

Though there are many low value products that it would be pointless for us to make, there are no industry sectors that we don't have what it takes to compete in. However if we do find ourselves in the situation where our high labour costs make us uncompetitive, we can easily fix it by letting our dollar fall to a level where they are competitive again.
Posted by Aidan, Monday, 12 January 2015 10:37:15 PM
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Dear Ponde,

<<Why don't we have an honesty system for Income tax as well.>>

Indeed, why not!?

To make it attractive, there should be a choice as to the areas of expenditure into which the tax goes, essentially a long list of default percentages which those who care can move to other items.

Even the most conscientious can find areas in which tax money does good, to replace those areas they do not agree with, thus the savings in ATO personnel will outweigh the loss from dishonest people.
Posted by Yuyutsu, Monday, 12 January 2015 11:34:35 PM
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Aidan you would do better generating your cheap energy with something more practical than solar.

Have you thought of getting your mates, the fairies down the bottom of the garden to work a treadmill for you. You'd get more useful power that way, than from fairy floss wind & solar.

Of course we could just use our abundant coal, the same as China do to put our factories out of business. Have you ever thought of that?
Posted by Hasbeen, Thursday, 15 January 2015 1:44:50 AM
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Hasbeen, solar has much lower ongoing costs than fossil fuels, and its upfront costs are declining. My state already gets about a third of its power from solar and wind. Yet you choose to flaunt your own ignorance by writing about fairies in a pathetic attempt to ridicule my post.

Use of our abundant coal is so environmentally destructive that it should not even be considered. But from a purely economic standpoint, it wouldn't be cheap enough anyway.
Posted by Aidan, Thursday, 15 January 2015 10:38:18 AM
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Ah, a South Australian Aidan, one of the states that only exist by bludging on the rest.

You've got the most expensive electricity in the country too, don't you? Bad planning can do that to you.

Sorry old fellow, the global warming scam is just about dead, & by the looks of what the sun is doing right now, you'll be importing a lot more of our coal than you currently do, to help keep you warm fairly soon.

Of course, you fail to mention how much of your expensive electricity is generated by Victorian brown coal. Perhaps you find it convenient to forget that when preaching green garbage.
Posted by Hasbeen, Thursday, 15 January 2015 6:20:36 PM
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Hasbeen,
<<Ah, a South Australian Aidan, one of the states that only exist by bludging on the rest>>
The other states only exist because they were reliant on convict labour at one time or another. And since federation, SA's needs have constantly been ignored. For the past two decades interest rates have been set far too high for SA's requirements, and he Federal government's doing very little to compensate.

<<You've got the most expensive electricity in the country too, don't you? Bad planning can do that to you.>>
It was the most expensive in the nation a few years ago, due in part to the urgent need to address thhe supply problemsfrom a bungled orivatization. But thanks to wind and solar the price is falling, and it is no longer the most expensive in Australia (though unfortunately I can't remember which state now is).

<<Sorry old fellow, the global warming scam is just about dead,>>
The only scam is those who are still claiming global warning isn't occurring. Last year was the hottest on record. Could heat stroke be the reason you've been halucinating those fairies?

<<& by the looks of what the sun is doing right now, you'll be importing a lot more of our coal than you currently do, to help keep you warm fairly soon.>>
I don't know what the sun's doing where you are, but over here it's shining. And few people need their houses heated at this time of year.

<<Of course, you fail to mention how much of your expensive electricity is generated by Victorian brown coal. Perhaps you find it convenient to forget that when preaching green garbage.>>
Thanks to wind and solar, we're a lot less reliant on Victorian brown coal than we used to be (though there's been an even bigger drop in consumption of South Australian brown coal). A decade ago the interstate power flow was nearly all one way: SA consuming electricity generated in Victoria. Now it often goes in the other direction.
Posted by Aidan, Thursday, 15 January 2015 7:21:36 PM
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