WASHINGTON (Reuters) - The top U.S. Senate Republican on tax policy raised questions on Wednesday about a border adjustment tax backed by Republicans in the House of Representatives, and suggested it could have difficulty passing the Senate as a part of a U.S. tax reform.
Border adjustment, which is a mainstay of the House Republican tax reform blueprint, would bring sweeping change to the U.S. corporate tax system. But it faces opposition from retailers, oil refiners and automakers who say it could raise prices for American consumers.
In a speech to the U.S. Chamber of Commerce, Senate Finance Committee Chairman Orrin Hatch did not reject the border adjustment tax proposed by House Speaker Paul Ryan. But he said there are questions about whether it would unduly burden U.S. consumers and businesses or pass muster under international trade rules.
“We don’t have definitive answers to any of those questions at this particular point. And without them, I don’t think I can give definitive positions,” Hatch said.
The Utah Republican did not say whether he thinks border adjustment could clear the Senate. But he said a handful of senators have “serious reservations” and noted that Republicans can ill afford to lose votes from their 52-seat Senate majority, even if they use a procedure known as reconciliation to avoid a Democratic filibuster.
“A major concern on tax reform is producing a bill that can get through the Senate,” Hatch said.
“We’ll basically need universal Republican support to pass anything through reconciliation. That’s difficult to accomplish under any circumstances, let alone on something as complicated as tax reform.”
Billed as a way to boost U.S. manufacturing and pay for corporate tax cuts, border adjustment would essentially tax imports but not exports. It is expected to be part of House tax reform legislation that could emerge in March or April.
“I’m optimistic we can find a common path,” House Ways and Means Committee Chairman Kevin Brady, Hatch’s congressional counterpart, said in a statement after the senator’s speech.
It is unclear whether the border adjustment proposal has President Donald Trump’s support. The president has called the proposal “too complicated,” but the White House says it is an option for paying for a wall along the U.S. border with Mexico.
Hatch said the Senate would not “simply take up and pass a House tax reform bill” but that his committee would produce its own proposal in the near future.
Reporting by David Morgan; Editing by Chizu Nomiyama and Tom Brown