|
However, it is also important to understand the repercussions of supply and demand and import taxes on a nation. All nations levy an import tax on goods or products or raw material imported from another country. This tax varies from one country to another and it all depends on supply and demand. However, supply and demand is not the only factor. Many times it is because a nation wants to give a competitive edge to the domestic manufacturers and producers who use all domestic products and raw material.
However, it has been seen that import taxes on a particular item is increased, this automatically affects the sale price of the item. The selling price increases. Assuming that the product is in high demand and supply is scarce, people will pay any price to get the item even if they are expected to pay the rise in import taxes. However, if the supply is more for an item that is not in demand and it has a high import tax, it will just lie on the shelf with no buyers.
This goes to show that supply and demand and import tax go hand in hand and any business takes all these factors into account. However, it is the small businesses who suffer when import tax is increased because many times they do not like to pass on the increase to their customers since the demand for the product or item is high. This results in the profit margin decreasing and the business is forced to layoff people to absorb high import taxes. Ultimately the economy of the nation starts reflecting the layoffs.
More Articles :
|
|