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Cox: I make ‘no apology’ for Customs Tarrif bill

Incoming residents will have to pay 35 percent duty on personal items brought in from overseas, up from 25 percent, after a bill was passed in the House of Assembly last night.

While Government said the Customs Tariff Amendment (No 3) Act 2011 would encourage residents to shop locally, the OBA argued that the bill would do nothing but frustrate.

One Shadow Minister even labelled it a “stealth tax,” which earned a strong rebuke from Premier and Finance Minister Paula Cox who said he had got his sums wrong and was engaging in “fantasy economics”.

The legislation also restricts the $100 duty free allowance to one member of a household travelling together until March 31, 2012. The measures have been in place since the bill was tabled on November 4, and were ratified by Parliamentarians late last night.

Ms Cox said the moves would help aid the ailing retail sector, describing them as “emergency measures” to ensure the safety of the 4,000 retail jobs now occupied by Bermudians. It will also cover lost revenue from payroll tax breaks earlier granted to retailers.

“It was important that further actions be taken to protect the retail sector,” said Ms Cox said.

Shadow Finance Minister Bob Richards criticised the legislation for being rushed through the door, calling it a reaction to the loss of local jobs at Willowbank resort and Citi Hedge Fund rather than a part of a plan.

“In this time in our economic history, we need plans,” he said. “We don’t need to be bouncing around like a pinball in a pinball machine.”

He said many residents felt that they were being punished by the legislation for shopping abroad, while the problem faced by the retail sector is a loss of customers caused by falling numbers of tourists and foreign workers.

He argued that the legislation would do nothing to discourage shopping overseas, saying that many Bermudians go away to shop for the wider selection and lower prices.

He described the measures as using aspirin to combat an infection, saying: “The aspirin might help the pain, but it’s not going to cure the infection.”

Shadow Education Minister Grant Gibbons said using Department of Statistics figures, he worked out that Government could rake in an extra $10 million over a six-month period, over and above the money it needs to cover payroll tax breaks for retailers plus retail renovations.

Dr Gibbons based his estimate on Department of Statistics figures showing that $70 million per year, “on average” is collected by Customs from returning residents.

He said raising the tax would generate an extra $12 million to $13 million extra per quarter, plus an extra $2 million to $4 million from removing the $100 exemption for returning members of the same household. He said this was $10 million more than Government needed to cover payroll tax breaks and retail renovations.

“The Honourable Member (Ms Cox) is actually coming out way ahead on this,” he alleged. “The honourable member is collecting ten additional million per six months beyond what she needed for payroll tax exemption and renovation.”

“I call that a stealth tax,” he continued, expressing hope that returning residents “remember which Government it is that put that tax on.”

Dr Gibbons went on to say that he does not think the new measure will discourage people from shopping abroad.

He added: “I don’t think this should be blamed on the retailers. This is a pure revenue raising increase as far as I can see.”

Premier Paula Cox interjected at this point to say the Opposition had got their sums “fatally wrong”.

She later said she made “no apology whatsoever” for implementing the measures.

“This was never ever intended as a revenue raising measure. It was to assist in preserving jobs,” she insisted.

In a subsequent e-mail to this newspaper, she wrote: “Contrary to what the Opposition is asserting as to Government gaining excessive revenue from the tax, the Opposition have got their figures badly wrong.”

She said the September Retail Sales Index shows the value of overseas sales declared by returning residents.

“The value of goods will be about $30 million. That will be about another three million in duty, not $12 million,” she said. “The value of goods purchased abroad is about $30 million. Based on spends from November to March last year overseas purchases were about $30 million.

“At 25 percent we would have collected about $7.5 million in duty. At 35 percent we will collect about $10.5 million in duty. So the effect of the change will be about another $3 million in duty that we will gain, not $12 million as Dr Gibbons asserted. Fantasy economics. However the amount lost in payroll tax for two quarters is about $8.5 million.”

See Monday’s

Royal Gazette for more from the debate on the Customs Tariff Amendment.

Premier Paula Cox

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Published November 26, 2011 at 1:00 am (Updated November 26, 2011 at 6:53 am)

Cox: I make ‘no apology’ for Customs Tarrif bill

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