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production for goods destined to the domestic market is not register neither is registered the subsidy cause to domestic demanders for lowering the price of that production, but economic agents (persons or firms; producers and consumers) are not the same.

The new estimation of STB that contemplates all cost derived from tax on exports can be expressed in the following way:

(4) PTSX2 = [TX0 + (tx . Pdx . QX)] / VASX

where QX is the total volume produced of the exportable good. The difference between (4) and (3) is:

( 5 ) [ t x . P d x . ( Q X - X ) ] / V A ; b u t , ( 6 ) Q X - X dX = D

That is, the difference between the produced level and exports is the domestic demand (DdX). Therefore, the new measurement of STBX can be expressed as:

(7) STBX2 = [TX0 + (tx . Pdx . DdX) + (tx . Pdx . X] / VASX > STBX1

Customs Duty (Tax on Imports)

A treatment conceptually symmetrical but with inverse results can be applied to the sector producing an importable good (“substitute industry” of the importable good).

The traditional measurement of Tax Burden on the substitute producing sector of an importable good (STBM) is:

(8) STBM1 = TM0 / VASM

Where TM0 computes other taxes revenue paid by the sector, different to the Tax on Imports or Customs Duty, as long as the collected revenue (TM = tm . PdM . M) is paid by demanders or consumers of the importable good.

But after TM the price of the importable good has been increased, as indicates expression (2), so TM has acted as a Tax on Consumption of the importable good which burden can be break down in two parts: the one already received by the government through the Customs Administration (tm . PdM . M) and the other part destined to finance the subsidy directed to the producer of the importable good [tm . Pdm . (DdM - M)]. The first one is the portion registered by the public accounting, because money passes to the Treasure through the Customs Administration; as long as the second portion implies a negative tax or subsidy to the producer of the importable good that from the sector point of view is not computed. 40

40 Once again a numerical example can be useful to clear up concepts. Assume that an Argentine domestic consumer purchases 100 unities of an importable good which international market price is one dollar. Half of that consume is supplied by the domestic sector producer of the importable good (substitutive industry of the importable good) and the other half is imported. The nominal dollar exchange rate is 3 pesos por dollar. At this exchange rate consumer’s total spending is 300 pesos. If government fixes a Custom Duty rate of 30% the final price will be 3,90 pesos, consumer’s spending – assuming similar quantity demanded – would be 390 pesos. The difference of 90 pesos is distributed between the government (receiving 45 pesos from the Custom Administration due to imports of 50 unities levied each one with 90 cents) and the substitute industry of the

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