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Couriers plan to protest duty hike

Steven Thomson

Two local package service companies are mounting a defence against a potential duty hike on all personal imports by rallying its customer base to speak out against the proposal.Steven Thomson, President of Mailboxes Unlimited, sent an e-mail to thousands of his customers on Friday asking for support to stop a possible rise in duty on goods he ships in to 35 percent.Tom Nelmes, chief operating officer of BEST Shipping, is planning on sending out an e-mail to his 4,000 customers today.As reported by The Royal Gazette last month, the couriers are reacting to Premier Paula Cox’s Pre-Budget Statement in which she said Government was considering “harmonising duty for personal imports”, potentially looking at making the duty rate on personal imports shipped in by air or freight, more in line with the airport rate of 35 percent. Currently duties range from five percent to 33.5 percent depending on the item.In an “urgent” e-mail to approximately 9,000 customers, Mr Thomson, whose company acts a middle man between vendors and consumers, asked for those who were concerned about the proposal to contact the Premier or their MP, call into local radio talk shows, write Letters to the Editor, and attend any open forum on the matter to ensure their voices are heard.While he stressed in his e-mail that at this stage, the tax idea was only a proposal, Mr Thomson said to customers: “The Premier, in recent interviews, has made it clear that she intends to discuss, in open forums throughout Bermuda, the potential to increase duty rates on all imported personal items to 35 percent as has been implemented at the airport.“Increasing duty by over 500 percent in some instances (clothing is currently 6.5 percent) would be destructive to both residents and Bermuda as a whole.”According to Mr Thomson, response to his e-mail plea was immediate and en masse.“I got return e-mails from people right away,” he said. “One that stuck a chord with me said ‘Yes we need to fight. I am a full size person and there is not much in Bermuda for people like me. I think it is a big injustice to our country. Everything is made easier for outsiders to buy Bermuda but for Bermudians, we are foreigners in our own land. It is not right’.”In her Pre-Budget Statement the Premier 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.”Mr Nelmes, of BEST, said he has “no problem” with Government raising duty charges on things such as luxury items, but rather with the “blanket coverage” of taxes that has been proposed.“I have a major problem with the protectionist type of mentality that restricts the freedom of choice,” he said. “It’s choice that is being put on the line here. People in the community should in an uproar about this.”The issue is becoming a vocal struggle between couriers and retailers, with Paula Clarke, chairman of the Bermuda Chamber of Commerce’s retail division, saying that the couriers were the biggest single threat to the livelihood of brick and mortar retailers.“The argument is being made that if you shop in Bermuda, the majority of your money is staying in Bermuda,” said Mr Thomson. “That’s a fallacy because the store that you bought it from has to bring the item in from away.“Nothing is made here. So what is the difference if you order it online and you bring it in through a company like Mailboxes, BEST, FedEx, DHL or IBC where we pay import duties, we hire Bermudians, we pay office rent and we pay corporation taxes?“In fact, we pay more than the retailers because we pay full payroll taxes where they (retailers) have been granted payroll tax relief. Why destroy the shipping companies? The law of unintended consequences is going to come into play here.”Mr Nelmes added: “It’s clothing and apparel that is the largest group of undeclared items at the airport; this proposal will force the man on the street to become a thief and a liar. Why should we do that?”Mr Thomson also questioned whether the retailers and Government are fighting the inevitable.“Are we really going to try and fight online shopping?” he asked. “Why don’t retailers try to get creative, like Gorhams is doing, and offer customers both (local and online options)?“We are talking about every method of importing things into Bermuda from ocean to air to couriers,” he added. “If this is all purportedly to help the retailers, two things will happen: one there will be a big backlash against the retailers and the second is it will injure the shipping companies.”Mr Nelmes had strong words for retailers: “Any retailer that stands up and supports this could go out of business because Bermuda will boycott them.”The men said that a shipping and courier committee is currently being formed in the Chamber of Commerce in order to better have the industry’s voice heard.

What you pay

Current duties levied on personal items imported via air or freight:

Clothing: 6.5 percent

Shoes: ten percent

Supplements (vitamins, etc): 15 percent

Camera equipment: 8.5 percent

Jewellery: 6.5 percent

Electronics: 22.25 percent