WASHINGTON A 20 percent import tax, backed by Republican leaders in the House of Representatives, is unlikely to win enough support from the Senate Finance Committee to be part of any Senate tax reform bill, the panel's Republican chairman said on Tuesday.
The comment by Senator Orrin Hatch of Utah is the strongest sign yet of the daunting legislative challenge that lies ahead for the border adjustment tax, or BAT, a controversial House Republican proposal that has already divided the business community and Republicans in Congress.
Hatch's finance committee, which consists of 14 Republicans and 12 Democrats, has oversight authority for tax policy and would need to approve any tax reform legislation considered in the Senate.
"It's going to be tough to pass. I don't think we can move it through the Finance Committee," the Utah Republican told reporters after discussing the BAT proposal at a meeting with Treasury Secretary Steven Mnuchin.
Hatch said the administration also opposes BAT: "They're against that ... if I interpret it correctly."
The proposal, which would exempt U.S. export revenues from federal taxation but impose a flat 20 percent tax on imports, is strongly backed by House Speaker Paul Ryan and House Ways and Means Committee Chairman Kevin Brady.
Neither Ryan's office nor Brady's had an immediate comment on Hatch's remarks.
If the House approved BAT but the Senate excluded it from legislation, House Republicans would need to use bicameral negotiations to get it included in final legislation for President Donald Trump's signature.
House Republicans have billed border adjustment as a way to meet Trump's pledge to create jobs at home while preventing American companies from moving manufacturing jobs and production facilities overseas.
But it has divided U.S. business by drawing enthusiastic support from exporters and fierce opposition from import-dependent industries, leaving many Republican lawmakers wary of the proposal.
Republican supporters say BAT is needed to pay for steep business tax cuts, citing independent analyses that estimate it would raise more than $1 trillion over a decade.
Administration officials have called for financing tax cuts with future economic growth. Some lawmakers have suggested deficit-financed tax cuts instead.
"We have to raise revenue," Hatch said. "There's no question about that. And we will. We know where it all is anyway."
(Reporting by David Morgan; Editing by James Dalgleish)