A plan that would have significantly altered the way goods traveling into the United States were taxed has died after meeting mounting resistance in Washington.
The border adjustment provision was introduced by Republicans in the U.S. House of Representatives earlier this year. However, in a joint statement issued last week by Speaker of the House Paul Ryan (R-WI), Senate Majority Leader Mitch McConnell (R-KY), Treasury Secretary Steven Mnuchin, National Economic Council Director Gary Cohn, Senate Finance Committee Chairman Orrin Hatch (R-UT), and House Ways and Means Committee Chairman Kevin Brady (R-TX), the plan was officially taken off the table.
"While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform,” the statement said.
The National Fisheries Institute, the trade group representing the U.S. seafood industry, opposes the border adjustment tax, NFI spokesperson Gavin Gibbons told SeafoodSource.
“NFI believes scrapping the border adjustment tax is a good thing. This tax could have killed a variety of seafood businesses and driven up the price of seafood for consumers,” Gibbons said. “It was a lose-lose proposition from the beginning.”
David Veal, the executive director of the American Shrimp Processors Association, which represents the Gulf Coast domestic shrimp sector, said his organization had supported the border adjustment tax and was “disappointed” it had failed to gain traction.
“Anybody who participates in an industry made up of relatively small producers – business who intend to sell their product domestically – are disappointed,” he said. “[It would have been] a step to level the playing field by giving small, domestic producers an opportunity to salvage part of the domestic market, which is being savaged by many unfair trade practices, including dumping, trade illegal subsidies and illegal use of veterinary drugs.”
However, because the United States imports up to 90 percent of the seafood it consumes, the majority of the seafood industry would have been particularly hard-hit by the border adjustment tax, Fortune Fish and Gourmet President and CEO Sean O’Scannlain said in a February article in the Wall Street Journal.
O’Scannlain said in the article that taxing the USD 100 million (EUR 84.5 million) the company spends annually on importing food would force him to pass costs onto his customers.
“It’s crazy, absolutely crazy,” O’Scannlain wrote. “Politically, it is a bad idea for Congress to have to defend increasing the average consumer’s food costs by a couple thousand dollars a year.”
In their joint statement, the leaders of the House and Senate said they would pursue other legislation to deliver “historic” tax reform in the fall.
