Foreign Governments Meeting to Discuss Border Tax; Retail Groups Ramp Up Opposition Efforts

NEWPORT, Rhode Island -- Foreign governments are in active discussions on how they would respond to implementation of the proposed border adjustable tax plan by the U.S., said Kenneth Smith Ramos, head of the Mexican Ministry of Economy’s trade and NAFTA office, at the Coalition of New England Companies for Trade Northeast Trade and Transportation Conference on April 12. Mexico and Canada recently organized a meeting in Washington and “35 embassies showed up.” Another meeting is scheduled for next week “and I think we have to get a bigger room,” he said.

Retail industry groups are ramping up efforts against the plan, developed by House Republicans (see 1612010056). The National Retail Federation launched “the next phase of a television and digital ad campaign against” the plan, it said in a press release (here). The Retail Industry Leaders Association is raising the alarm with consumers and farmers, who may see fuel costs rise by 35 cents per gallon, RILA’s Hun Quach said at the CONECT event.

The border adjustable tax “is a tax on American consumers” so large corporations can pay no corporate taxes or get tax refunds for the government,” Quach said. Other industries may benefit, but for retailers consumer spending is the industry’s “bread and butter,” she said. Retailers that sell imported products may see their effective tax rates double, triple or even quadruple, she said. “We have members that say they will pay a tax rate of over 100 percent.”

In any case, the plan could stall in the Senate before it ever comes to fruition, Quach said. A total of 26 senators have come out in opposition or expressed concerns. “If you know the Senate, 26 Republicans plus most Democrats means it won’t cross the finish line,” she said. That’s making their House colleagues “a little nervous,” Quach said. “Why take a difficult vote when they have to go home in a time of widely attended town halls to tell their constituents they’ve increased prices 25 percent on essentials like fuels and food. The politics are tough.”