Today marks the one year anniversary of GSP expiration. Once again, Congress is leaving DC for a 5-week recess, leaving importers stuck paying higher taxes without any indication of when they might find some relief. So what has changed? For starters:
- American companies have paid an estimated $670 million in unnecessary taxes. That number increases by nearly $2 million per day, meaning the taxes paid will grow to about $750 million by the time Congress returns from its recess and at least $860 million if Congress fails to renew GSP during the brief time it is back in DC in September. For those that are curious, they would surpass $1 billion some time in late January at the current rate.
- The number of American companies and associations publicly urging Congress to renew GSP exceeded 600, nearly double the amount when the program expired. The Primarily small businesses, they are the exact types of companies that Members of Congress envisions when they talks about “job creators” being burdened by high taxes and economic uncertainty. Yet when given the chance to lower taxes and increase certainty in a bipartisan fashion, they fail to act. The results are predictable, yet Congress laments the fact that the economy isn’t better.
- The proposed fee charged on all imports that was deemed verboten to pay for GSP has been used for a variety of non-trade issues. The other legislation includes the December 2013 budget deal and, more recently, the transportation bill that passed the House this week. That means that GSP users stuck paying higher import taxes today will also pay higher import fees in the future…to fund unrelated projects. (The Senate also passed a bill using Customs users fees for unemployment insurance, but the House never took it up.)
So where does that leave us? Essentially, companies will be forced to pay tens of millions of dollars while Congress is in recess. The uncertainty associated with tax rates going forward, as well as refunds for taxes paid to date, will prevent companies from growing their business, and trade-generated money will be used to pay for unrelated projects.
Members of Congress should be home for the next 5 weeks – and GSP users should seek out their representatives to let them know personally just how hard Congress has made it to run and grow their business. If they hear from enough people back home, they just might be motivated to act when they return to DC in September.