Raising online purchases duty would hurt hard-up consumers, says courier
Raising duty rates on online purchases shipped in by courier would be “a massive and punitive tax increase” on consumers, Mailboxes Unlimited boss Steve Thomson said yesterday.“Protectionist tax policies stifle the economy and hurt the local population,” he said. “All of Bermuda should be up in arms with this potential policy as it will affect us all negatively and hurt us all equally.”Mr Thomson was reacting to Premier Paula Cox’s Pre-Budget Statement on Monday in which she said Government was considering “harmonising duty for personal imports” as it braces for a major revenue shortfall.She said essentially Government was looking at making the duty rate on personal imports (shipped in by air or freight), which range from five percent to 33.5 percent, more in line with the airport rate of 35 percent.But Mr Thomson said this would amount to a 500 percent tax increase on Bermuda residents in some cases.“It is true that the Premier is considering increasing duty for personal items being imported to 35 percent, similar to the airport. Essentially, this amounts to a massive and punitive tax increase on Bermudians and residents.“Clothes are currently 6.5 percent, so 35 percent would be in excess of a 500 percent increase.“Clearly that would be damaging to most Bermudians and hurt them financially.“In addition, as can be evidenced with the massive backlash on The Royal Gazette’s and Bermuda Sun’s websites, the comments by the local population was disbelief and anger.“I believe of the 88 comments I read, not one was supportive of this increase and blamed the retailers for bringing this forward to the Government.”Mr Thomson said he was also concerned about how the increases would be implemented.“If the target is the importation of personal items, couriers are only one method ofimportation,” he said.“In addition to Mailboxes, ZipX, FedEx, Best Express, DHL, IBC, UPS, there is also the Post Office, who recently had a huge advertising campaign to encourage residents to use their service. What about American Airlines air freight or Delta, Continental, BA, Jet Blue, Air Canada etcetera?“Many local import personal items via these air freight companies. Lastly, people import larger items that were ordered on the web via ocean freight companies, for example, fridges, washer and dryers, furniture, boating equipment … via Bermuda Forwarders, BEST, BOSS, Paget Freight … Where do you draw the line?”Mr Thomson said it also should be remembered that local retailers must import everything they sell too.“No items are made in Bermuda,” he said.He added: “If a local resident can get the item she ordered for say $50 on line rather than $100 here in Bermuda, then it follows that the $50 she saves can be spent elsewhere in the Bermuda economy. This helps the local economy. Why should the retailers get all $100 of her expendable income? Why shouldn’t it be spread around to other Bermudian companies like restaurants, taxis, food stores etcetera?“The Bermuda Government must remember that the majority of items being imported are items that are not available in Bermuda either by size or colour or item itself. We have a very limited selection due to our population size.”He said Bermudians may wind up so angry they may refuse to shop locally.In her statement on Monday Premier Cox said: “There are different rates of duty that are assessed to individuals who import items for personal use. At the airport the rate is 35 percent however via other methods of import, the rates vary from five percent to 33.5 percent.“Because of the inconsistent duty rates across methods of import, Government efforts to support local business are not as effective as intended. Therefore the Government will examine changes to duty rates for personal imports.“Changes that harmonise rates must be done in a way to ensure that those who import goods for business use or for resale do not face additional requirements and additional ‘red tape‘.“The Government continues to remain committed to supporting local retail and is looking at a way to ensure that the correct balance is struck.”Retailers have called for couriers to pay a higher rate of customs duty on goods.Paula Clarke, chairman of the Bermuda Chamber of Commerce’s retail division, has said that the couriers were the biggest single threat to the livelihood of brick and mortar retailers.