TheWeekInCongress.com

Week Ending July 16, 2004

                                                                                         

 

House Resolution 705 urging the President to resolve disparate treatment of direct and indirect taxes presently provided by the world Trade Organization

 

 

BRIEF

  The resolution is more of a soapbox rather than a realistic approach to reality because the matter it addresses is quickly coming to a vote in the next few months either as S 1637 or HR 4520, two bills designed to rearrange tax advantages for US exporters so that they will not violate World Trade Organization rules.

   A US policy that rebated corporate income taxes to exporters, allowing them to sell their products at a competitive price in foreign markets but still earn the profits they want. was determined by the WTO to be a direct tax and therefore prohibited. WTO imposed a 1 percent per month duty on US exports that increased 1 percent monthly while the US was in violation. The matter may not have been very pressing because Congress has taken 8 months to pass the bill correcting that violation causing the monthly duty increase to rise to the additional 8 percent US exports now carry.

   Nevertheless, the Resolution recognizes the prohibition on direct taxes but says it is arbitrary and ‘may’ induce economic distortions among nations with disparate tax systems. The Resolution also notes that value added taxes, considered an indirect tax is allowed to be rebated and are done so by other countries.

  The Resolution calls for the President to report to Congress, beginning with the 109th Congress, on progress in pursuing multilateral and bilateral trade negotiations to eliminate the barriers the Resolution believes exist. The Resolution also requires that the President propose alternatives to the ‘disparate treatment’ of those taxes and considers other tax revisions that would benefit US exporters.

   More information on the WTO and US exporters can be found at S-1167 and HR-4520 in the member’s section of TheWeekInCongress.com

 

Sponsor: Rep. Phil English (R-PA-3rd)

Vote: Passed House 423 to 1 (RC372) (July 14, 2004)

Cost to the taxpayers:  No discernible cost. ## All Rights Reserved. No reproduction or distribution without written permission from TheWeekInCongress.com.