Tax day. For some that means refunds and others it means cutting a check to Uncle Sam. For GSP importers, it means another $1.8 million in higher import taxes (in addition to corporate taxes, income taxes on wages, etc.) because Congress failed to renew GSP.
These companies are desperately hoping – praying, really – that Congress will renew GSP retroactively so those extra import taxes are refunded. As of today, American companies are waiting on $468 million in tax refunds – and that number grows every day.
Why should Congress care about refunding those taxes? While TD Ameritrade says many people expect to save their personal refund, GSP importers plan to spend refunded tariffs on everything from new inventory to new warehouses to new workers – and sometimes all three! For example, in response to a follow up question to our recent survey:
- an Oregon company said that “if renewal refunds are paid, we would use the money to further grow our business in terms of investing in inventory and equipment for growth and thus our need for additional employees.”
- the owner of a company in Ohio said that “we would use these funds to increase our building size and add workers. Approximately 12-15 workers.“
- a Minnesota company that has paid nearly $800,000 in unexpected taxes said it planned to “open Los Angeles, Northeast and Northwest locations, resulting in 6-10 jobs, all exceeding $50,000 per annum in salary.”
- a jewelry manufacturer in California said a tax refund would allow the company “to recover approximately $50,000 in duties paid on a pass-thru basis to our vendors. This would allow the hiring of 2 additional personnel to assist in our production department.”
In some cases, this includes re-hiring staff that were laid off as a direct result of GSP expiration. For example:
- a small business in New York said a retroactive renewal would “allow us to re-hire laid-off staff members and proceed with our planned warehouse expansion and purchase.”
- a company in Texas said that with a tax refund “we will be able to hire our sales force back.”
Of course, companies do not expect to grow as long as GSP remains expired. One company response summarized the situation perfectly:
“If GSP renewal refunds all tariffs paid to date, my company would be able to retire debt and improve cash flow. With improved cash flow we can return to focus on sales growth. Sales growth would result in increased salaries for current employees and enable us to hire on additional staff. Less debt and better cash flow would also result in more income and therefore more tax revenue for the federal government. It would be good for my company and the country.”
Now they just need Congress to act.