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US Responds To Afghanistan Exit Taxes With Aid Cuts

by Mike Godfrey, Tax-News.com, Washington

26 July 2013


The Senate Appropriations Committee's Subcommittee on State Department and Foreign Operations has voted to invoke steep cuts on United States aid to Afghanistan if the latter's Government continues to insist on "exit fees" on American property during the phased military withdrawal from the country.

A bipartisan amendment to the annual budget for the State Department for the federal fiscal year beginning on October 1 would withhold USD5 of aid to the Afghan Government for every one dollar in fees imposed on the US for bringing equipment and supplies back to America.

Patrick Leahy (D – Vermont), Chairman of the Senate Judiciary Committee and of the Subcommittee on State Department and Foreign Operations Appropriations Committee, arranged for the relevant amendment to be added. The sanctions are sponsored by Leahy, Lindsey Graham (R – South Carolina), the Subcommittee's Ranking Member, and Dan Coats (R – Indiana), also a member of the Subcommittee.

An earlier Afghan rule had required that every truckload entering the country have an invoice of its contents – said to be a highly impractical requirement in wartime. Now that the US military, agencies and contractors are shipping equipment out, as part of the phased withdrawal from the country over the next 18 months, fines of USD1,000 per truck have reportedly been levied, when such entry invoices cannot be produced.

Congress was recently informed about nearly USD1bn in business taxes, licenses and penalties imposed by the Afghan Government on contractors supporting US operations, and warned of hundreds of millions of dollars in additional future costs if the exit fees are maintained.

On the other hand, it was also noted that, since 2002, the US has contributed more than USD90bn for humanitarian and reconstruction programs in Afghanistan, not including the hundreds of billions more in military costs.

Leahy said the Afghan taxes and penalties are "blatant extortion. It's the last straw, and (the aid cut) may finally get their attention. We are giving the Government a clear and unambiguous message."

Graham added that the Afghan Government's action is "ridiculous, offensive, and will not stand," while Coats concluded that "we must not allow the Afghan government to exploit the US further as we begin our anticipated draw down."

TAGS: tax | business | public sector | budget | corporation tax | fees | licensing | contractors | Afghanistan | United States | penalties

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