UK Protectionism - Medical Supplies During Covid

 


    Due to the ongoing pandemic, the United Kingdom government has the VAT tax on medical supplies made outside of the EU. This is so that it is easier for these necessary and vital supplies to be produced and shipped to places that need them. The theoretical impact on domestic producers of medical supplies is since there will be a lot more foreign medical supplies being imported into the UK and bought by UK medical firms, domestic producers will have supply and demand issues. Since there will be many more options to choose from and an increase in foreign supply, the domestic suppliers will likely have less issues with supply, as they will not need to make as many products due to the increase in overall supply. As for domestic consumers, they will be able to purchase a lot more supplies, since they will have more they will be able to purchase, and secondly, because they will not have to pay tax on the foreign goods they buy. As for foreign producers, they will have a considerable increase in supply and demand. This is because, due tp the lack of the usual VAT tax in the UK, they will be able to sell more since the UK will be able to buy more, which means demand increases, and since demand is increasing, their supply will have to increase as well to keep up with the increased demand. This lack of tax on these goods will ultimately affect the UK government negatively, however. Since there will be less taxes paid overall, that means there will be less government funding. Lastly, as for the world production efficiency of the good, the efficiency will likely increase, as the suppliers will be making many more goods and it will be easier to purchase these goods. 

    As for why the government may want to use protectionist measures in the production of this good, they likely took these measures to ensure enough medical supplies could be made and sold in the midst of the pandemic. In addition, especially since there was a lot of financial struggles for businesses during the pandemic, the UK government likely wanted to make it easier on businesses selling these medical goods. 

Source used:

https://www.gov.uk/guidance/pay-no-import-duty-and-vat-on-medical-supplies-equipment-and-protective-garments-covid-19


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