Legal Definitions - tare

A tariff has two primary meanings in a legal and economic context:

• 1. A Tax on Imported Goods: In international trade, a tariff is a tax or duty imposed by a government on goods and services imported from other countries. Tariffs are typically used to regulate trade, protect domestic industries from foreign competition, or generate revenue for the government. They can be calculated as a percentage of the imported goods' value (known as an ad valorem tariff) or as a fixed amount per unit.

  • Example 1 (Protective Tariff): Imagine the country of "Agricola" wants to strengthen its domestic dairy industry. To make imported cheese more expensive and less competitive, Agricola's government imposes a 25% tariff on all cheese imported from other nations. This makes locally produced cheese more attractive to consumers, thereby protecting Agricola's dairy farmers.

    Explanation: This example illustrates a protective tariff, where the government uses the tax on imports to shield a domestic industry from foreign competition and encourage local production.

  • Example 2 (Common External Tariff - CXT): The "United Trade Alliance" is a group of neighboring countries that have formed a customs union. They agree that any electronics imported into any member country from outside their alliance will be subject to a uniform 10% import tax. This is known as a Common External Tariff (CXT), ensuring consistent trade policy for non-member nations across the entire bloc.

    Explanation: This demonstrates a Common External Tariff, where multiple countries in a trade agreement apply the same import duty to goods coming from outside their union, simplifying trade rules and presenting a unified front.

• 2. A Schedule of Rates for Services: In the context of public utilities and regulated services, a tariff refers to the official list or schedule of prices, rates, and charges that a company (such as an electricity provider, water company, or telecommunications firm) is authorized to charge its customers for its services. These tariffs are often regulated by government agencies to ensure fairness and prevent monopolies from overcharging.

  • Example: The local "HydroPower Utility" publishes its annual tariff document, which details the different rates for residential electricity consumption, commercial usage, and peak-hour charges. This document also outlines any fixed service fees and how customers are billed, ensuring transparency and adherence to regulatory standards.

    Explanation: Here, the tariff represents the official, regulated price list for services provided by a public utility, ensuring that customers know what they will be charged and that the utility operates within set guidelines.