US Congress Unlikely To Pass Tax Changes For Exporters This Year

by Mike Godfrey, Tax-News.com, Washington

09 September 2002

Speaking to AFX News last week, senior House Ways and Means Committee Democrat, Robert Matsui revealed that there is unlikely to be any action this year on amending US subsidies to exporters, following the recent World Trade Organisation ruling on the subject.

The WTO ruled on August 30 that the European Union has the right to impose sanctions on the US equivalent in value to the tax breaks given to companies such as Boeing and Microsoft under the current Extraterritorial Income (ETI) regime.

Although House Ways and Means Committee Chairman, Bill Thomas has introduced legislation designed to address the preceived imbalance in the US' tax treatment of domestic and overseas companies, Mr Matsui told the news agency that progress on the isssue is unlikely 'because the Senate doesn't intend to bring it up.'

'That being the case, there is not much incentive for us to take the bill up either, particularly since there is so much controversy on Mr Thomas's other provisions.'

Mr Matsui added that even taken in isolation, he believes that the provision repealing export tax subsidies for major US companies faces a tough ride:

'Because he is basically taking from Boeing and some of the exporters and giving to those that undoubtedly are offshore in terms of the tax effects in his bill...I think that's a very difficult piece of legislation to pass going into the last month or so of the session,' he explained.

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