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Airport duty

The late Sir John Plowman, a veteran of years of lawmaking, was fond of warning against unintended consequences. A law or policy could be enacted, with the best of intentions, only to cause all kinds of unforeseen problems.In fact, the problems can often be predicted if the policy is talked through and tested before being put into place. But if it is done hastily, disaster is close behind.A recent example of this is the decision to raise Customs duty at the Airport to 35 percent from 25 percent.The stated goal was to help retailers, reeling from a poor economy and overseas competition.First, the law was implemented poorly. Having first said it would take effect immediately, Premier Cox was then forced to backtrack and to delay implementation until it could be tabled in the House of Assembly.Worse, the move has backfired. Far from discouraging overseas shopping, the change has seen people say that they will simply send home goods they have bought abroad rather than carry them through the Airport. At the same time, they are angry at retailers for causing the duty to be increased; hardly the atmosphere that will encourage people to shop.The loophole in the law is that there is no similar tariff for goods brought in by courier. And in fact, Government does not publicise the volume of goods shipped this way either. But there is little doubt online shopping and shipping from overseas has hurt local retailers’ market share as much or more than purchases by travellers.This is not an inducement to raise tariffs for couriers; such a policy would be self-defeating as, having floated it, some bruised retailers already know.And it may result in a reduction in Government revenue. The rise in duty will cause more people to ship from overseas because the duties are lower, so if the same amount of goods are shipped, Government will take in less revenue without having helped retailers.Instead, Bermuda should reduce Customs duty for retail goods so that local businesses can offer goods at competitive prices, in much the same way that payroll tax for shop staff has been temporarily reduced.Now it also turns out that the measure is in fact permanent, not temporary, as was widely thought, so that will exacerbate the problem.Premier Paula Cox should withdraw the measure. It may well reduce Government revenue, it makes life more expensive for some consumers at a time when they are facing challenges and it does not help the people it was supposed to. It is not working.