Governments impose export taxes -- also called tariffs or duties -- on products that companies produce in that country but sell (at least in part) in other countries. Export taxes raise money for governments and may help control the exports of valuable resources.
How Export Taxes Work
Governments levy taxes on things and people for many different reasons. The main role of taxation is to provide a government with funds to finance its operations, which include things like roads and other infrastructure, defense and law enforcement, education and a justice system. Customs officials monitor what goes in and out of countries through official points and charge exporters taxes on certain items at a specified rate. Exporters must pay these taxes in order to clear customs and ship out their products.
Purpose of Export Taxes
Many resource-rich countries charge export taxes on high-value products, such as oil or minerals; for example, Mozambique charges export taxes on diamonds, and Thailand has a complex system of permits, quotas and taxes for teak wood exports. Countries also levy export taxes to discourage exportation and encourage producers to keep more products within the country.
U.S. Export Taxes
Article I, Clause Five of the U.S. Constitution bans export taxes on any foreign-bound American product. The ban stems from concerns from the powerful cotton industry in the 18th century, and to some degree liquor refineries, especially rum producers. Many sectors of the economy developed under colonialism and were heavily dependent on profits from exports to Europe.
Use of Export Taxes
Currently, a number of countries use export taxes on their primary exports, especially primary commodities like oil, copper, tin, hard woods, wheat, coffee and sugar. Commodity exporting countries use export taxes as a source of revenue and also as a way to mediate the flow of precious resources out of the country, so that supplies are depleted at a slower rate. Several hundred years ago, export taxes factored heavily into countries’ trade policies, which were primarily based on mercantilism.