The Consequences of Brexit (part 2)

[andyofborg]

No, there's an options which has been wrongly excluded.

The UK will be in net receipt of car tariff money. We import more in cars than we export. Therefore there's a whole bunch of extra tax revenue in the form of tariffs coming in to the treasury. If the government spend some of this on a tax cut for UK car makers then they're still quids in.

 

This is a tax rise (the tax been tariffs on car imports) being partially used to fund a tax cut on car exporters. Nothing has to be cut in terms of public services. In fact there will still be a bunch of money left over to spend on more public services.

 

so this is where the £350 million a week for the NHS is going to come from?

[Petminder]

I'm not sure you've grasped tariffs. If everyone took the "some tax is better than no tax" we'd be, well, Greece.

 

My error, I was thinking of the tariffs we will impose on all imported cars.

[I1L2T3]

No, there's an options which has been wrongly excluded.

The UK will be in net receipt of car tariff money. We import more in cars than we export. Therefore there's a whole bunch of extra tax revenue in the form of tariffs coming in to the treasury. If the government spend some of this on a tax cut for UK car makers then they're still quids in.

 

This is a tax rise (the tax been tariffs on car imports) being partially used to fund a tax cut on car exporters. Nothing has to be cut in terms of public services. In fact there will still be a bunch of money left over to spend on more public services.

 

Somehow I don't think planning for use of revenue from tariffs in that way is the plan. Nissan will want no tariffs because if part of their business model is selling to the European market then they won't want the price of their products in the European market jacked up by 10%. It will make them less attractive and would probably impact sales. It also implies that there will be implicit support to every exporter, and that support will be cordinated by the state. We absolutely do not want that outcome. I can't imaging anything worse because once it becomes apparent that exporters receive de facto state aid then we the boundaries between the corporates and state start to blur. Either you end up with some form of crony corporate state where corporates influence the state excessively, or a more left wing model where the state intervenes in unconstructive ways.

 

---------- Post added 29-10-2016 at 20:59 ----------

 

My error, I was thinking of the tariffs we will impose on all imported cars.

 

Which means UK consumers take the hit

[unbeliever]

Somehow I don't think planning for use of revenue from tariffs in that way is the plan. Nissan will want no tariffs because if part of their business model is selling to the European market then they won't want the price of their products in the European market jacked up by 10%. It will make them less attractive and would probably impact sales. It also implies that there will be implicit support to every exporter, and that support will be cordinated by the state. We absolutely do not want that outcome. I can't imaging anything worse because once it becomes apparent that exporters receive de facto state aid then we the boundaries between the corporates and state start to blur. Either you end up with some form of crony corporate state where corporates influence the state excessively, or a more left wing model where the state intervenes in unconstructive ways.

 

---------- Post added 29-10-2016 at 20:59 ----------

 

 

Which means UK consumers take the hit

 

Yes UK consumers will take the hit if they choose to buy high end imported cars from Germany. Rather progressive no? Of course they'll have to compete for UK customers with UK based high end car makers so they'll have a job trying to pass even part of the tariff onto UK customers.

 

Look car tariff skew the market. Giving the money back to car makers unskews it. The UK government collect more car tariff money than UK manufacturers pay so they can wipe out the effect of tariffs on UK car makers and still have a bunch of money left over.

 

This is completely separate bag of money from the EU membership fees so I don't know how that got involved.

 

---------- Post added 29-10-2016 at 21:21 ----------

 

so this is where the £350 million a week for the NHS is going to come from?

 

It's not coming from anywhere. If you look back I've been highly critical of this figure ever since it appeared. Membership might have risen to £350m/week in the long term if we lost the rebate which was entirely possible. But not for a few years so it was very bad form to use it. And even then one should make at least some deduction for the money that comes back in grants and such.

[Gamston]

Somehow I don't think planning for use of revenue from tariffs in that way is the plan. Nissan will want no tariffs because if part of their business model is selling to the European market then they won't want the price of their products in the European market jacked up by 10%. It will make them less attractive and would probably impact sales. It also implies that there will be implicit support to every exporter, and that support will be cordinated by the state. We absolutely do not want that outcome. I can't imaging anything worse because once it becomes apparent that exporters receive de facto state aid then we the boundaries between the corporates and state start to blur. Either you end up with some form of crony corporate state where corporates influence the state excessively, or a more left wing model where the state intervenes in unconstructive ways.

 

You have completely missed the point. The most likely consequence of BREXIT negotiations is tariff free trading of motor vehicles between the UK

and the EU. Unbeliever has pointed out the UK Government will have a big windfall in the form of tax revenue from EU imported motor vehicles

if BREXIT negotiations don't work out well for the UK based motor industry. In the worst case scenario, this windfall money could be used

to support the UK based motor vehicle in some way. Therefore it makes common sense to give Nissan an assurance now in order to secure current UK jobs and create positivity in the current climate. It is similar to giving the wife an assurance she will get a fair cut of any future lottery winnings which come my way, to encourage her not to run off with the milkman.

[I1L2T3]

You have completely missed the point. The most likely consequence of BREXIT negotiations is tariff free trading of motor vehicles between the UK

and the EU. Unbeliever has pointed out the UK Government will have a big windfall in the form of tax revenue from EU imported motor vehicles

if BREXIT negotiations don't work out well for the UK based motor industry. In the worst case scenario, this windfall money could be used

to support the UK based motor vehicle in some way. Therefore it makes common sense to give Nissan an assurance now in order to secure current UK jobs and create positivity in the current climate. It is similar to giving the wife an assurance she will get a fair cut of any future lottery winnings which come my way, to encourage her not to run off with the milkman.

 

The point I'm making is that if we are being told the promises to Nissan are cost neutral either:

1. We will be in a customs union after leaving the EU

2. We will stay in the EU

 

Either is completely and utterly not what Fox etc... want. Trying to gloss over that by arguing that if we end up with tariffs it will all somehow be ok is disingenuous because it is UK consumers that will be hit, either through increased prices or limitation of choice because there is not an adequate range of substitute products being manufactured here. Nor is there adequent latent manufacturing capacity in England and Wales to quickly produce a suitable range of substitutes.

[hackey lad]

so this is where the £350 million a week for the NHS is going to come from?

 

please stop crying and whinging , old news . the uk has voted to leave , get over it

[unbeliever]

The point I'm making is that if we are being told the promises to Nissan are cost neutral either:

1. We will be in a customs union after leaving the EU

2. We will stay in the EU

 

Either is completely and utterly not what Fox etc... want. Trying to gloss over that by arguing that if we end up with tariffs it will all somehow be ok is disingenuous because it is UK consumers that will be hit, either through increased prices or limitation of choice because there is not an adequate range of substitute products being manufactured here. Nor is there adequent latent manufacturing capacity in England and Wales to quickly produce a suitable range of substitutes.

 

 

No that's not really the point. Because in the event that WTO car tariffs are imposed we as a country will make a profit out of those tariffs at the expense of the EU. We can spend a portion of that supporting our own car industry to keep it competitive in EU exports, but the EU nations can't do the same for their car exporters without pulling in tax revenue from elsewhere.

They know this and we know it. As a result I predict that the Germans and others will actually go out of their way to get us to agree not to impose mutual car tariffs and we shall be able to trade it for something.

 

Car tariffs are not something for us to fear. They're for the rest of the EU to fear.

[I1L2T3]

No that's not really the point. Because in the event that WTO car tariffs are imposed we as a country will make a profit out of those tariffs at the expense of the EU. We can spend a portion of that supporting our own car industry to keep it competitive in EU exports, but the EU nations can't do the same for their car exporters without pulling in tax revenue from elsewhere.

They know this and we know it. As a result I predict that the Germans and others will actually go out of their way to get us to agree not to impose mutual car tariffs and we shall be able to trade it for something.

Car tariffs are not something for us to fear. They're for the rest of the EU to fear.

 

Nissan was certainly fearful of them. Nissan don't primarily care about the macro effects of Brexit on the UK economy. The primary concern was its own bottom line. That is what the story this week was all about, the fact it has been told by the government that its bottom line wont be impacted. The point I'm making is whatever it was told it can only mean, in a rational world, one of two things:

1. That we will be in a customs union

2. We will not leave the EU

 

The undesirable irrational alternative is the use of tariffs collected on imports to provide state support for Nissan, and presumably all other impacted exporters. That would mean that hard Brexit ushers in an era where all exporters suckle on the teat of the state. Not at all what we want. There is every chance that the EU could block our exports if that was happening because of rules around state aid for private companies. Which leads us back to the only possible things Nissan could have been told:

1. That we will be in a customs union

2. We will not leave the EU

[mafya]

Why don't remainers stop trying to second guess and read what the business secretary says about the deal= https://www.theguardian.com/business/2016/oct/27/new-nissan-super-plant-hopes-for-tariff-free-eu-access