Question

Indonesia has imposed high export taxes of raw wood and timber? why would it do this?...

Indonesia has imposed high export taxes of raw wood and timber? why would it do this? Which industries benefit from it? who is hurt by these high export taxes?

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Answer #1

Export taxes are imposed on the amount of exports done by the domestic producers. It is a policy of restricting exports so that domestic producers can supply more in the domestic market. Consumers will benefit from this tax because they will now a lower price and are able to purchase a greater quantity. Export industries are worse off because now exports are expensive. This implies that those producers who was supplying in the domestic market only are now benefiting after tax and those producers who are supplying in foreign countries are worse off.

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