Are there any countries besides Canada where the flow of goods is restricted between the country's provinces?

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This year, Canada's Supreme Court ruled as following:

The Supreme Court of Canada has ruled unanimously that provinces and territories have the constitutional right to restrict the importation of goods across provincial and territorial borders — as long as the primary aim of the restriction is not to impede trade.

Thursday's ruling will dash the hopes of many Canadians who were hoping to have easier access to cheaper and sought-after products in neighbouring provinces, particularly alcohol and tobacco.

To me this seems to be a bizarre ruling, as it essentially means that Canadian provinces are integrated economically even less than the individual countries of the European Union, since no such restrictions are possible within the EU.

Are there any other countries in the world where a private citizen may not freely move goods between provinces?

JonathanReez

Posted 2018-10-09T06:00:51.663

Reputation: 36 466

3since no such restrictions are possible within the EU. Actually, movement of goods subject to excise taxes (alcohol, tobacco, gas) is restricted within the EU, as those excise taxes go to each country(https://ec.europa.eu/taxation_customs/business/excise-duties-alcohol-tobacco-energy_en). Cross a border with more than the maximum personal allowance and you will be taxes and probably fined. https://europa.eu/youreurope/citizens/travel/carry/alcohol-tobacco-cash/index_en.htm – SJuan76 – 2018-10-09T07:47:18.950

@SJuan76 there is no such thing as a "personal allowance" within the EU. As long as you can prove that the alcohol or cigarettes are for your own personal use, you can move as many as you want across borders. – JonathanReez – 2018-10-09T08:02:26.873

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SFAIK the purpose is to let different provinces impose different provincial tax rates, "particularly on alcohol and tobacco". A private citizen can import a certain amount for their own use (see e.g. here or here). I don't know that it affects other goods or "economic integration". Provinces have their own sales taxes.

– ChrisW – 2018-10-09T08:24:11.570

1What does 'restrict' actually mean here? I'm sure every country that lets provinces/states/etc. set their own taxes on certain goods will have at least one province that restricts trade through extra taxation of goods they don't want imported. – Giter – 2018-10-09T13:57:33.043

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@JonathanReez - actually there is an allowance: to determine if the products you have bought are for your own use, EU customs authorities can look at several different elements such as, (..) the quantity of products you are travelling with.

– Alexei – 2018-10-09T14:23:02.243

2@Alexei yes but there is no hard limit. Plus you can ship alcohol directly to consumers in any other EU country if you pay their local sales tax. Canada doesn't even allow that, AFAIK. – JonathanReez – 2018-10-09T15:56:14.417

You're right about alcohol and tobacco and about the fact that restrictions for goods imported for personal use are far and few between but there are some examples of restrictions within the EU: weapons, drugs that are illegal in some places but tolerated in others (e.g. cannabis), means of transportation (e.g. cars), pornographic material... – Relaxed – 2019-11-20T21:54:48.300

Answers

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Some of the United States (if you consider those "provinces") have restrictions on (and/or would require you to pay state taxes when) transporting alcohol across state lines.

A vehicles from out of state might be impossible to register in California.

And so on.

Note this, from Constitutional Restrictions on State Taxation -- The Prohibition on Discriminating Against Interstate Commerce

[N]o State, consistent with the Commerce Clause, may “impose a tax which discriminates against interstate commerce . . . by providing a direct commercial advantage to a local business.” This antidiscrimination principle “follows inexorably from the basic purpose of the Clause” to prohibit the multiplication of preferential trade areas destructive of the free commerce anticipated by the Constitution.

I think that's saying that:

  • A state is not allowed to say, "You can buy locally-produced beer for 10 cents, but you have to pay a buck of tax on imported beer".
  • They can say, "We want to tax beer, no matter whether it's local or imported."

The latter is similar to what happens in Canada -- i.e. they don't want you able to import goods from a neighbouring province where the tax rate is lower, in order to evade paying local taxes. Also in Canada people are allowed to import a certain amount for personal use (e.g. a few litres of spirits, fwiw). The law protects provincial tax revenues and the provinces' ability to set their own tax rates.

ChrisW

Posted 2018-10-09T06:00:51.663

Reputation: 1 185

Is there a hard limit on how much alcohol you can bring for your own use across state lines in the US? – JonathanReez – 2018-10-09T15:57:35.213

I think it varies from state to state. – ChrisW – 2018-10-09T16:09:51.277

Yes, but is there at least one state that says "only 2 literally per person", like some of Canada's provinces do? – JonathanReez – 2018-10-09T16:13:20.280

E.g. Pennsylvania appears to allow a gallon of liquor from abroad, but forbids any private import of beer from other states. That's state law (not federal law).

– ChrisW – 2018-10-09T16:16:25.640

Wow, even the US is not immune from this lunacy! Accepting your answer. – JonathanReez – 2018-10-09T16:21:20.710

@JonathanReez I was told (by an émigré to Canada) that when the Soviet Union collapsed they stopped collecting taxes. So state employees including the police were no longer paid, the state had no money. So policemen made their living by issuing on-the-spot fines -- which, you had to pay them in cash. IOW if you wish you didn't have to pay taxes, be careful what you're wishing for! – ChrisW – 2018-10-09T16:38:28.180

There's a difference between charging a sales tax and preventing people from bringing alcohol from another province of your own country. Losing some tax revenue to another province should be the price to pay for being a single country. Ideally all states/provinces should just have a single alcohol tax and then no one would have to "smuggle" anything in the first place. – JonathanReez – 2018-10-09T16:44:02.677

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In Australia animals, plants, fire works, drugs, firearms etc. maybe lawful and licenced in one state or a portion of one state, but be unlawful to transport or be unlawful to transport without licensing in both states. The former two are due to agricultural quarantines, the latter due to different laws or licensing regimes.

Samuel Russell

Posted 2018-10-09T06:00:51.663

Reputation: 4 153

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India, Prior 2018, Flow of goods and services between states was not allowed. Every state had checkpoints and only those with permits were allowed into states. The destination state always levied a percentage of tax on the imported goods/services. Only those, who paid in advance and had the right permit were allowed into the states. Companies used to suffer a lot. However, things changed. This was changed in the last 2 years, with some GST implementation. Still, its work in progress.

I think, this is a common story amongst Asian Countries.

Reason being, States/provinces, where the tax revenue is less will be compensated by the duties levied on these imports. In addition, it would make economic sense and encourage the province citizens to produce these goods locally. More employment? I am not sure to what extent this worked. But in India, it didn't work.

user29025

Posted 2018-10-09T06:00:51.663

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There are a couple of examples in the US. California restricts plant imports (and horses, and perhaps other livestock), with inspection stations on every major highway leading into the state.

Then there's cigarette smuggling, which is apparently thriving on the East Coast. Low-tax cigarettes from southern states are transported to New York & other states with higher taxes: https://nypost.com/2017/11/11/nyc-is-the-cigarette-smuggling-capital-of-the-us-study/

jamesqf

Posted 2018-10-09T06:00:51.663

Reputation: 10 503

Restrictions on imports of plants and animals are common enough around the world. E.g. you can't bring a pet into the UK from the EU without a pet passport. As for cigarettes - is there a hard personal limit on the number of cigarettes you can bring into NYC? – JonathanReez – 2018-10-09T16:12:05.863