Introduction Of The Cross Border Shopping

1728 Words May 29th, 2016 7 Pages
Cross-Border Shopping
Introduction
Emergence of revolution in the world led to globalization. Hitherto, people gain from the massive and healthy business trades across the borders. In this case, one country is able to gain from selling or buying of goods. At some point, countries realized the importance of creating a global trading arena to encourage the producers from all nations. In this regard, people enjoyed from some exemptions that interfered with flow of goods and service across borders. Despite the vast advantage that parties enjoy in this kind of trade, they face various hurdles, which demoralize them as they perform their business transactions. For instance, changes in the economic status in one of the countries result in reduction in value of goods. Likewise, some traders may suffer due to high rates of taxation in the bordering countries.
Understanding the concept of cross border shopping
The presence of competition in the indirect tax within the export and import zones leads to the creation of horizontal tax externalities. Vertical tax externalities may also arise between the central and regional government. In most of the cases, both countries tend to maximize revenue through tax collection through purchasing and selling of goods. One party may therefore set policies that aim at in increasing tax collection (Lucas 369). Likewise, the government may also balance the availability of imports in the country by employing certain regulations that minimizes their…
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