Large duty hike makes no sense - here's why

FRIDAY, JAN. 27: It is human nature, to fight against the system if — in a free society like Bermuda’s still is — the system is wrong. So here we go.

There is a petition going round that will be handed to the Premier once it is at maximum strength. At the moment more than 2,000 signatures are on it, and it is growing daily.

The petition, arranged with the blessing of Stephen Thomson, the energetic owner of US Express and Mailboxes Unlimited, is exposing the flaws that are myriad in the notion that Government could raise personal item import taxes to 35 per cent.

“Our issue is the damaging tax proposal of increasing duty for all imported personal items by as much as 500 per cent, whether by air freight, ocean freight or courier” says an impassioned Thomson. “This will affect all residents of Bermuda without exception. Over 95 per cent of all imported items come into Bermuda via ocean freight, air freight, courier or the Post Office, which are billed at the normal lower duty rate. Only five per cent comes through the airport, which is at a 35 per cent duty rate.

“If the intention is to ‘normalize’ or ‘harmonize’ duty rates, then they should lower the airport rates back to the normal duty rates that all other methods are on, “ he added.

On January 6 this year Mr Thomson wrote to the Premier seeking clarification on why the mooted rates were... well, still being mooted?

Mr Thomson, whose US Express business brings small items into Bermuda at a much lower rate than residents pay when bringing small items in via the airport tax, is annoyed by the talk of this tax.

“And in an election year? This is just astonishing,” he lamented. “I would argue that there would be a huge backlash to the implementation of this policy against both the retailers who drove this policy and the Government for increasing taxes on the people.”

And historically, he has a point. If and when Governments choose to ramp up taxes in election years, it reflects very badly at the polls.

Bermuda is already reeling at the almost daily increases in pretty much every cost here, and this tax would force more to lose faith and hope in Bermuda. “More significantly than that,” Mr Thomson said, “online shopping is not just handled by couriers. Residents buy fridges, washers, couches and so on — and these items are brought in weekly in consolidated containers through BEST, BOSS, Bermuda Forwarders, Paget Freight, Fast Forward Freight to name a few. Many online purchases are brought in through air freight at the airport including AA, Delta, Air Canada, BA, US Air, Continental etc,” Mr Thomson said. “All of these Bermuda companies would be hurt.”

Worrying

Already, for the first time in Bermuda history, outward freight revenues from the island have risen above inward freight revenues, and that’s a worrying story in and of itself.

But what should be most disconcerting to the Government is the petition, which can be found at: http://www.change.org/petitions/the-hon-paula-a-cox-mp-jp-premierfinance-minister-bermudians-and-residents-against-proposed-duty-increase

The petition is constantly growing, with residents of The Rock showing their angst. A few recent comments on the site are particularly compelling, with one woman writing: “I signed because it’s utterly ridiculous, they have other options — Government cars, civil service and MPs’ salaries! I’m sick of them penalizing the little person.”

Another disgruntled islander said: “It’s quite obvious that this decision was made with those in mind that can afford to pay the 35 per cent. Personally I feel it’s a great insult for one to dictate to residents how and where they can spend their hard earned money.”

Yet another said: “As a Bermudian working abroad, I am always looking to support my home, however I feel that 35 per cent will put too much strain on us financially. What is this Gov’t trying to do to us?”

There is no firm commitment from the Government at the moment to increase the rate to 35 per cent and the hope of Mr Thomson and his followers is that power of the people, as expressed through the petition, will help it stay that way.

Mr Thomson’s final salvo makes the most salient point of all: “We need to remember that no items are really made in Bermuda. Retailers, much like ourselves, import everything into Bermuda and simply re-sell non-Bermudian items. Why is their method of importing product so inherently superior to our method? We, the shipping industry, actually pay more taxes than the retailers as we don’t have the benefit of payroll tax relief.”

Now it’s game on. Will people power triumph? Stay tuned.

Ric Chapman is the executive producer of SONGOPOLY TV.