IWPA, Other Groups Meet to Discuss Concerns Over Border Adjustability Provisions in GOP Tax Plan
The International Wood Products Association (IWPA) was one of several companies that met on Dec. 5 to discuss import-related concerns presented by the “border-adjustability” aspects of House Speaker Paul Ryan’s, R-Wis., and House Ways and Means Chairman Kevin Brady’s, R-Texas, blueprint on tax reform, according to an IWPA email on Dec. 8. “While there are many aspects of the tax reform we support such as lowering corporate income taxes, the border adjustability provision, if included as described, would effectively function as a tax on imports because income on the sale of imports would be treated as business income while the cost of the goods could no longer be deducted,” IWPA said in the email. Among other things, the proposed tax model would exempt exports from taxes while making imports taxable (see 1612010056). IWPA said it looks forward to working with industry colleagues to explain what it says are expected negative business and consumer impacts of the proposal to policymakers.
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Border adjustability is going to be a major concern for members of the Retail Industry Leaders Association (RILA), too, a spokeswoman for the group said in a Dec. 9 email. "In a nightmare scenario, a border adjustable tax will force retailers to significantly raise prices on consumer staples such as food, medicine, clothing, and much more," the spokeswoman said. "Retail supply chains and sourcing operations are extremely complex and involve many factors, such as pricing, access to raw materials, availability, and cost of labor." Many imported items have no domestic equivalent, including bananas, coffee and certain drugs, she said.
RILA members will meet with lawmakers in coming months to show the economic disadvantages of the border-adjustable proposal, the spokeswoman said, adding that association leadership met with Brady and congressional staff this week on behalf of its membership. "We’re hopeful that they will keep an open dialogue [and] truly listen to our concerns," she said. IWPA and RILA are coordinating with several other groups to raise their concerns to lawmakers, and are trying to bring the many concerned stakeholders to the table, according to an industry source with close knowledge of the situation.