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Opposition: Permanent Customs duty hike ‘contradicts original intentions’

The Opposition accused Premier Paula Cox of a “change in policy” relating to the Customs duty hike from 25 percent to 35 percent rubber-stamped by Parliament on Friday.She also explained the $100 duty-free allowance for returning residents has been restricted to one person per household for a six-month period until March 31 2012.

The One Bermuda Alliance believed the move was only a temporary one, for six months, and expressed surprise when Ms Cox described it as permanent. When Ms Cox pointed out that she had never described the measure as temporary, the OBA complained that had not been made clear.

It subsequently issued a press release criticising her for what it described as a change in policy.

When Ms Cox introduced the Customs Tariff Amendment (No 3) Bill to the House of Assembly, she explained the duty on goods declared by returning residents has, as of November 4, increased from 25 percent to 35 percent. She made no reference to how long the measure will last for.

The Premier had, on September 30, announced a freeze on payroll tax relief for retail businesses for the same six-month period through to March 31.

The aim of increasing Customs duty from 25 percent to 35 percent was to mitigate the loss of money from the payroll tax relief, and encourage Bermudians to shop locally, according to her.

When discussing the details of the bill on Friday, Shadow Finance Minister Bob Richards indicated the Opposition belief that the 35 percent duty rate would drop again on March 31.

“Much has been made of the fact that this increase is temporary,” he claimed.

Ms Cox interrupted with a “point of clarification” to say: “You haven’t heard me say that the 35 percent is temporary. I said the personal allowance was temporary.”

Mr Richards replied: “It wasn’t clear before, but we have it straight now and hopefully the public does too.”

Fellow OBA MP Grant Gibbons asked why there was no “sunset” clause in the legislation referencing the March 31 end of the personal allowance restrictions.

Ms Cox said she plans to deal with that during the Budget period in February.

She noted that while “some have said” the personal allowance should be abolished, others believe it should be increased.

When she first announced the duty and personal allowance changes in September, the press release issued on her behalf was headlined “temporary tariff relief measures”.

It put an end-date of March 31 on the $100 allowance restriction and made no reference to the 35 percent rate being temporary.

The OBA believes the press release mislead them because it stated: “The tariff changes are a part of a basket of temporary measures to assist local businesses that have a pressing need for financial relief due to the ongoing global recession.”

They felt this made it look like all the measures would expire on March 31.

In a press release issued yesterday afternoon, Mr Richards and Dr Gibbons said: “Premier Cox revealed during Friday’s House debate on the Customs Tariff Amendment Act that the ‘temporary’ 35 percent airport duty on goods declared by people returning from overseas has now become permanent.

“The Premier’s decision imposes yet another penalty on everyday people for her mishandling of the public purse.

“The change in policy became clear when OBA members asked why there was no expiration date or ‘sunset clause’ in legislation addressing the temporary aspect of the 35 percent duty and the reduced $100 personal exemption changes.

“Premier Cox admitted she planned to remove the $100 exemption changes in the 2012 Budget, but had no intention of reversing the 35 percent duty measure; effectively making it a permanent increase.”

According to the OBA: “The decision contradicts her intentions when she introduced the ‘temporary emergency measures’ in September to assist Bermuda retailers and ‘discourage personal spending abroad’.

Mr Richards said: “The Premier should not make people pay for her financial mismanagement by making this duty change permanent.”

He alleged that the change was in fact a “stealth tax”. Dr Gibbons had already made that accusation in the House on Friday, prompting the Premier to insist the measures are job-saving in intent, not revenue-raising.

The Royal Gazette invited Ms Cox to respond to the One Bermuda Alliance press release, but she did not do so by press time.

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Published November 28, 2011 at 9:12 am (Updated November 28, 2011 at 9:11 am)

Opposition: Permanent Customs duty hike ‘contradicts original intentions’

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