Tariffs Preferable to Quotas

Three Causes Why Tariffs Are Preferable To Quotas

1. Tariffs Generate Revenue for the Government:

If the U.S. government places a 20% tariffs on imported Indian cricket bats they will gather $10 million dollars if $50 million value of Indian cricket bats are introduced in a year. That may sound like petite change for a government, but given the millions of different goods which are imported into a country, the numbers start to add together. The Progressive Policy Institute has established that the United States gathers 20 billion dollars a year in tariff income. This is income that would be lost to the government unless their raise quota system charged a licensing fee on importers.

2. Import Quotas Can Lead to Administrative Corruption:

The government now has to tell a number of importers that their cricket bats will be let into the state and tell some other importer than his will not be. This provides the customs officials many power as they can now give right to use to favored corporations and deny right to use to those who are not preferential. This can cause a stern corruption difficulty in countries with import shares as the importers selected to meet the quota are the ones who can give the most favors to the traditions officers.

3. Import Quotas Are More Likely to Cause Smuggling:

Both tariffs and import quotas will affect smuggling if they are set at difficult levels. If the tariff on cricket bats is placed at 95% then it's probable that people will try to sneak the bats into the country unlawfully, just as they would if the import quota is only a little fraction of the demand for the product. So governments have to set the tax or the import quota at a sensible level. But what if the demand varies?

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Resource article: http://www.expertsbuzz.com/

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