(a) Explain five reasons why tariffs are imposed on imports. (b) State five functions performed by the customs authority.

Answer Details

(a) Five reasons why tariffs are imposed on imports

1. To raise revenue for the government: Import duties are an important source of income used to finance public services.
2. To protect infant/local industries: By making imported goods more expensive, tariffs enable young home industries to compete and grow.
3. To discourage the importation of harmful or undesirable goods: High tariffs reduce the inflow of goods considered dangerous or luxurious.
4. To improve the balance of payments: By reducing imports, tariffs help to correct an unfavourable balance of payments and conserve foreign exchange.
5. To prevent dumping: Tariffs discourage foreign firms from flooding the country with cheap goods that would ruin local producers.

(Retaliation against another country's trade barriers is also acceptable.)

(b) Five functions performed by the customs authority

1. Collection of import and export duties: It assesses and collects duties on goods entering and leaving the country.
2. Prevention of smuggling: It patrols borders, ports and airports to stop the illegal movement of goods.
3. Inspection and examination of goods: It checks imports and exports to ensure they agree with the documents and are not prohibited.
4. Compilation of trade statistics: It keeps records of goods imported and exported, which are used to compute the country's trade figures.
5. Enforcement of trade regulations: It ensures that quotas, bans and other government trade laws are obeyed.

(Protecting society by preventing the entry of prohibited or dangerous items such as drugs is also acceptable.)