(Reuters) - U.S. Treasury Secretary Steven Mnuchin on Thursday laid out an ambitious schedule to enact tax relief for the middle class and businesses by August, but said the Trump administration was still studying a proposed new border tax on imports.
Comments in his first televised interviews since taking office last week suggested that much work was still needed on key elements of the sweeping tax reform plan that he called his “No. 1 priority.”
"We are committed to pass tax reform. It will be very significant. It's going to be focused on middle income tax cuts, simplification and making the business tax competitive with the rest of the world," Mnuchin told CNBC in his first television interview since taking office last week. (cnb.cx/2mg9Kq7)
“We want to get this done by the August recess,” he added, acknowledging later on Fox Business Network that such a timeline was “very aggressive.”
U.S. equities have risen to record highs in recent weeks on hopes tax reform and other Trump administration policies would boost growth, but investors have started to become impatient for details.
President Donald Trump has promised announcement of a “phenomenal” plan by early March to cut business taxes.
The dollar fell against a basket of major currencies, while yields on U.S. Treasuries slipped after Mnuchin failed to provide much new information on the tax plans. U.S. stocks were mixed.
Some Republican senators have criticized a House Republican plan to levy a 20 percent tax on imports aimed at encouraging more U.S. production and exports and raising $1 trillion in revenue over a decade to offset lower business tax rates.
Mnuchin said the border tax plan was still being studied, but the tax reform plan would be negotiated with the House and Senate.
“We’re looking at it seriously. There are certain aspects of it that we’re concerned about, there are certain aspects that we like,” Mnuchin told Fox Business Network of the border tax adjustment plan. “It’s going to be something that’s focused on growth, and we will have listened to people’s concerns and we will have taken them into account.”
In addition to tax reform, Congress and the administration are trying to settle on a plan to replace “Obamacare” with new healthcare legislation.
Mnuchin did not rule out potential tax cuts for wealthy earners, but told CNBC that the administration would aim to offset any “high end” tax cuts with reduced deductions and other breaks.
He told both networks that he believed the tax reform plan would help the United States boost economic growth above 3 percent by late 2018 from 1.6 percent in 2016. Growth effects from tax reform and less business regulation would not likely start to take hold until next year, he added.
He told CNBC the Trump administration would use “dynamic scoring” models that would likely assume more growth than models used by the Congressional Budget Office and the Joint Committee on Taxation. This would have the effect of boosting assumed revenues from tax reform and relaxation of regulations.
Given the still-low interest rate environment he said it “makes sense” for the Treasury to examine whether to issue long-term debt of 50 to 100 years “at a very slight premium,” but said he was not ready to make any announcements on this topic.
Mnuchin added to recent comments in the Wall Street Journal regarding the strong dollar, telling Fox Business Network that short-term increases in the dollar’s value “are a reflection of the optimism of the economic plans” of the Trump administration.
Trump had pledged to declare China a currency manipulator on his first day in office, but Mnuchin told CNBC he would pursue the normal Treasury process of examining currency practices by major trading partners. Treasury is required by law to report on these findings by April 15.
He added that Treasury was also considering allowing the U.S. Export-Import Bank to make loans larger than its current $10 million limit. EXIM has been restricted in its ability to lend because its board is not at full strength.
Mnuchin said the Trump administration was not interested in simply subsidizing large corporations.
Reporting by Sweta Singh in Bengaluru and David Lawder in Washington; Editing by Chizu Nomiyama and Andrea Ricci