December 2001 — American consumers could be forced to pay a "terrorist tax" on goods and services as a result of the war against Osama bin Laden and the Taliban regime, says Jorge Gonzalez, chair and professor of economics at Trinity University.

Before the Sept. 11 terrorist attacks, most companies in the United States did not maintain large inventories of goods because they could predict with some degree of accuracy the level of demand for their products. If demand rose, they could count on overnight delivery services to move goods quickly from a warehouse to a shipping center, Professor Gonzalez says. But the attacks have changed all that. Now, shipments must be inspected numerous times to ensure they aren’t tainted and are free of anthrax, a process that results in delays and added costs, he says.

Thus, the business cycle is changing in the short run, and many firms are starting to stockpile their inventories, which slows down payments. Only time will tell whether the increased costs will cut into profits, Professor Gonzalez adds.

"The concern of many companies is whether this 'terrorist tax' is a temporary tax," Professor Gonzalez says. "If we defeat the Taliban in a timely manner, things should go back to normal." If the war lasts for a long time, he says consumers will hear more about the "terrorist tax."

To learn more about the “terrorist tax” from Professor Gonzalez, contact Susie P. Gonzalez at 210-999-8406 or e-mail susie.gonzalez@trinity.edu.