Legal Definitions - revenue tariff

A revenue tariff is a tax imposed by a government on imported goods primarily for the purpose of generating income for the national treasury. Unlike a protective tariff, which aims to shield domestic industries from foreign competition by making imported goods more expensive, a revenue tariff's main objective is to raise funds to finance government operations, public services, or specific projects. These tariffs are often applied to goods that are not produced domestically, or on goods where domestic production is minimal, ensuring that the tax primarily serves as an income source rather than a barrier to trade for local industries.

• Example 1: Luxury Goods in a Developing Nation
  Imagine a small island nation that does not have the manufacturing capacity to produce high-end electronics, such as premium smartphones or advanced gaming consoles. To fund its public education system, the government imposes a 10% tariff on all imported luxury electronics. This tax is not intended to protect a local electronics industry, as none exists at that level. Instead, it serves as a direct source of revenue, collecting funds from consumers who purchase these imported, non-essential items.

• Example 2: Imported Coffee Beans in a Non-Producing Country
  Consider a country with a climate unsuitable for growing coffee beans, meaning all its coffee is imported. The government decides to implement a small tariff of $0.25 per pound on all imported raw coffee beans. Given the high national consumption of coffee, this seemingly small tax generates a significant and consistent stream of income for the government, which it then allocates to maintaining national infrastructure. The tariff's purpose is purely revenue generation, as there are no domestic coffee growers to protect.

• Example 3: Non-Essential Consumer Goods for Healthcare Funding
  A government seeks to establish a new national healthcare fund. To finance this, it imposes a 5% tariff on all imported sugary beverages and snack foods. While there might be some domestic production of similar items, the primary goal of this tariff is not to make domestic products more competitive, but rather to capitalize on the high volume of imported non-essential goods to generate substantial revenue for the healthcare initiative. The tariff is set at a level that ensures a steady income stream without drastically reducing imports or significantly altering consumer behavior.