U. S. scraps its bor­der tax pro­posal

Cana­dian of­fi­cials very pleased with de­ci­sion ‘in favour of open trade and open bor­ders’

The Hamilton Spectator - - CANADA & WORLD - KRISTY KIRKUP

OT­TAWA — Cana­dian of­fi­cials are prais­ing a U.S. de­ci­sion to drop a con­tentious bor­der tax pro­posal, sug­gest­ing its death sig­nals an open-mind­ed­ness in the Trump ad­min­is­tra­tion on open bor­ders and free trade.

Canada is pleased to see the de­ci­sion, For­eign Af­fairs Min­is­ter Chrys­tia Free­land said Thurs­day, not­ing on Twit­ter that both economies pros­per to­gether.

From the mo­ment the bor­der ad­just­ment tax was floated early this year, Prime Min­is­ter Justin Trudeau, Free­land and other Cana­di­ans vo­cal­ized con­cerns to key U.S. of­fi­cials, added Free­land’s spokesper­son Adam Austen.

“We are very pleased with to­day’s an­nounce­ment in favour of open trade and open bor­ders,” he said.

A bor­der ad­just­ment tax sys­tem had been con­tem­plated in or­der to pay for lower U.S. tax rates over­all with­out blow­ing a hole in the Amer­i­can bud­get.

U.S. of­fi­cials said Thurs­day they’re “con­fi­dent” such a sys­tem is no longer needed to re­duce broader tax rates.

The re­marks came in a joint state­ment from Trea­sury Sec­re­tary Steve Mnuchin, White House eco­nom­ics aide Gary Cohn, House Speaker Paul Ryan, Se­nate Ma­jor­ity Leader Mitch Mc­Connell, Se­nate Fi­nance Com­mit­tee Chair Or­rin Hatch and House Ways and Means Com­mit­tee Chair Kevin Brady.

“While we have de­bated the pro-growth ben­e­fits of bor­der ad­justa­bil­ity, we ap­pre­ci­ate that there are many un­knowns as­so­ci­ated with it and have de­cided to set this pol­icy aside in or­der to ad­vance tax re­form,” it said.

Cana­dian gov­ern­ment in­sid­ers seemed deeply re­lieved to see dis­cus­sion about the bor­der ad­just­ment tax come to an end, sug­gest­ing the tax threat­ened to be more harm­ful to Canada’s trade with the United States than NAFTA rene­go­ti­a­tions or pro­tec­tion­ist mea­sures on steel or in other ar­eas.

The fed­eral gov­ern­ment lob­bied hard against it, and in­sid­ers say Thurs­day’s de­ci­sion to ditch the bor­der ad­just­ment tax vin­di­cates their ef­forts.

Crit­ics of the idea warned it would have pro­voked a trade war, in­ter­na­tional sanc­tions and hiked the cost of Amer­i­can im­ports.

NAFTA talks start Aug. 16.

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