It’s not just the American automotive industry that is facing difficulties these days: the Russian automotive industry is struggling, too. I know, I know. You’re thinking “the Russians have an automotive industry?” It’s no Big 3 (which is perhaps a good thing lately) but it exists. Just barely.
To protect the industry, the Russian government has slapped an increased duty on imported vehicles. It is not a popular tax. As prices soar for what are considered substandard vehicles, Russians have sought out second-hand imports, primarily from neighboring Japan.
This week, a protest against the increased tax in the port city of Vladivostak boasted at least 500 protesters. At least 100 Russian protesters were subsequently detained by police. The arrests won’t stop protestors who are planning more demonstrations in the coming weeks.
An organized tax protest over taxing imports? How very 1773 America of them.
It’s Fix the Tax Code Friday!
For most of the week, the headlines have involved the crisis in the automotive industry with eyes on the “Big Three”: Ford, General Motors (GM) and Chrysler. Execs from the Big Three jetted to DC to beg lawmakers for loans worth billions of dollars, warning that the failure to deliver the loans could spell disaster for the industry and related commerce.
Congress refused to vote on the bailout, citing a lack of a restructuring plan from any of the three motor giants. Congressional leader Harry Reid has given the Big Three a deadline of December 2 to come back to Congress with a workable plan.
One version of a bailout would use $25 billion in funds from the Energy Department structured as a loan. The funds were previously earmarked for development of fuel-efficient vehicles. Repayments by the industry would serve to replenish the fund.
Another version of an auto industry bailout would take funds already promised to the banking industry as part of that $700 billion bailout.
Either version would rely on the immediate use of taxpayer funds, which is causing consternation in Congress. Funding for the next fiscal year is already tight which means that services may be cut and taxes may be raised in an effort to “right the ship” and settle the budget. With a majority of Americans unhappy with Congress right now, lawmakers don’t want to dig themselves an even bigger hole. But not acting at all could have a similar effect since so much of the American economy is related to the automotive industry.
So today’s Fix the Tax Code question is:
Should the government bailout the auto industry using taxpayer dollars? And if so, which version of the package sounds best – or do you have another idea altogether?
