‘Retail’ Classification To Be Reviewed

October 2, 2011

Saying “Government will make the tough choices for the benefit of all of Bermuda’s people,” Premier Paula Cox announced this evening [Oct.2] said she has requested a review of business classifications for retail businesses.

On Friday [Sept.30] the Premier announced that payroll tax will be set at a zero rate for the retail sector for a six month period ending on 31st March 2012.

“The payroll tax relief is intended to provide cost reduction to businesses in the retail sector so that doors may be kept open and staff may be retained. It will also provide workers in the sector with additional spending power,” said the Premier on Friday.

Speaking on the planned review of retail categories this evening Premier asked, “Are gas stations that sell food, drinks and other consumer items to be classified in the retail sector or are they in the transport sector?”

“In modern economies like Bermuda’s economy, there are many more grey lines between business sectors than there used to be. This is a reason to take a fresh look at how economic policy initiatives should apply to different sectors of business activity during difficult economic conditions where financial relief is the policy goal.”

“Categories of business activity used to depend upon fairly distinct divisions of economic activity. These divisions of economic activity are no longer as clear and distinct as they once were.”

“As Minister of Finance, I have requested a fresh review of business classifications for this policy initiative for retail businesses. I have asked also for estimates of cost so that I may consider the possible extension of the temporary payroll tax relief,” continued the Premier.

The Premier’s full statement follows below:

Over the last two decades, consumer-oriented businesses have extended the mix of goods and services that they sell to people. Changes over the years mean that old models and definition of what should be classified as ‘retail’ today are less relevant and some further changes are required.

For example, barber shops and beauty salons now sell hair products and related items to their clients. Are they to be classified as operating in the ‘household and personal services sector’ where historically they have been classified for economic purposes? Or are barber shops and salons also ‘retail’ outlets?

Similarly, are gas stations that sell food, drinks and other consumer items to be classified in the retail sector or are they in the transport sector?

In modern economies like Bermuda’s economy, there are many more grey lines between business sectors than there used to be.

This is a reason to take a fresh look at how economic policy initiatives should apply to different sectors of business activity during difficult economic conditions where financial relief is the policy goal.

Categories of business activity used to depend upon fairly distinct divisions of economic activity. These divisions of economic activity are no longer as clear and distinct as they once were.

As Minister of Finance, I have requested a fresh review of business classifications for this policy initiative for retail businesses. I have asked also for estimates of cost so that I may consider the possible extension of the temporary payroll tax relief.

Accordingly once further data is available, a listing of any further categories, if any, that may benefit from the temporary payroll tax concession will be available from the Office of the Tax Commissioner.

Recall that payroll tax was rolled back this year for all businesses at an estimated full-year cost of $50 million to the public treasury. The focus therefore will continue to be on assisting the most vulnerable sectors with ultimate limits set by affordability.

We always have to consider what is affordable for the country as part of our debt management strategy.

It is never possible to please all stakeholders when tough choices must be made. However, in order that we do go forward with a benefit for the majority, this Government will make the tough choices for the benefit of all of Bermuda’s people.

On the customs duty changes at the airport, given the time required to make system changes, including the changes to bank kiosks at the airport that are used for payment of customs duty, the recently announced changes to the customs duty on goods accompanying residents when they return from overseas trips will have effect from November 4, 2011.”

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Comments (51)

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  1. sandgrownan says:

    She’s out of her depth. She doesn’t know what to do does she.

    • PEPPER says:

      Sandy, she will be on Hott 102 the Sherry Simmons show on Monday Oct 3rd… I guarantee you the callers will say ” Premier ..you are doing a great job….and keep up the good work….I wonder what questions to me the best intervier to hit the airways will ask the Premier.

      • Black Soil says:

        The Premier is shell-shocked. She does not know what POLICY changes are necessary to stem the tide. Less and less people want to work in Bermuda. Bermuda is dying.

      • Sandgrownan says:

        We need a Cog interview drinking game. A shot everytime she says “synergy”, “stakeholder” and you have to drink the whole damn bottle if she says “worldwide recession”, “bermuda is not immune” or “weather the financial storm”.

        • BadApple says:

          And 2 shots every time she mentions “resetting the dial”.

    • SOB99 says:

      So Premier Cog remains silent for months then has the great idea of “helping” retailers and now is backpedaling. I think Laverne will have some race issue with this and blame all non PLP for not praising Premier Cog for thinking outside the box. Could Noel Ashford get involved in this as that was pure entertainment the other day.

  2. Anon Ymous says:

    This speaks volumes! It appears that this whole thing, although well intended, has swung into action without any real thought or planning going into it beforehand. Wow!

    • PEPPER says:

      Paula Cox has no idea what she is doing…she scares the hell out of me… this women has to be removed and the sooner the better ….all she is thinking about is the up coming election …

  3. Shaking the Head says:

    Make it up, day to day. That’s been the case for at least 7 years.

  4. What is going on? says:

    Wow….. I don’t think she knows what to do…. desperation setting in. Maybe she realises how bad it is and is now making decisions without thinking them through….. TOO LATE.

  5. Cancer says:

    Lady premier needs to think things thru thoroughly before trying to implement. Now she’s rolling back dates!! Gosh lady!!’ I’m voting OBA…. CC premier in waiting!!

  6. Bedhead says:

    Well DUHHHHHHHH!!!!!!!!!!

  7. Triangle Drifter says:

    This lot could not operate a snowcone stand succesfully on summers hottest day.

  8. John Does says:

    I am not picking on restaurants but I think that there is too many in Bermuda. They grew very fast in the good years when there was more people in Bermuda with pockets full of money. They need to downsize to a more realistic number. Why is it that they have not been paying pay roll tax for sometime now yet new restaurants keep opening so is business really that bad. Also as a percentage how many Bermudians are employed in this trade when compared to construction, carpentry, and various other trades which are really hurting at the moment. If there is money or help available let’s help everyone who really need it. One example would be to reduce the payroll tax to various trades but not eliminate it completely.

    As for the increase at the airport people will just find other ways to shop to save money as nobody has the money right now to pay way over the odds. I remember a hand held marine radio at PWs was $300.00 yet online it was $100.00. Also this hand held marine radio is also a duty free item. To ship the item to Bermuda was also only $30.00.

    If this increase is going to be here for sometime I recommend that Mailboxes and ZipX which are both in the New York area should open up a drop box or mail drop off counter at JFK airport so we can drop off our goods prior to boarding the plane back to Bermuda.

  9. Raynelle says:

    I went shopping yesterday for a pair of socks for a 3 year old female, at the beginning of summer the socks cost $2.50. Yesterday I was told that they are now $6.00. The agreement went to affect on yesterday so can you please tell me how you get a $3.50 mark up on a pair of socks that the lace will probably fall off after the first wash. You said for the greater good for retail. How can we buy Bda if the prices are so outrages. What about the greater good of us who try to BUY BDA.

  10. Curious George says:

    This is a complete circus! Only in Bermuda!

  11. Carse Yer Wote (Original) says:

    The delay is so that the customs agents can be trained how to calculate 0.35 on the calculator. That should take about a month.

    • Sandgrownan says:

      LOL

    • Think about it says:

      Actually, you’re the one responsible for calculating YOUR duty jack@ss, and then the cashiers process your payment.

      Next time you want to be smart, check your facts and know what you’re talking about.

      • 32n64w says:

        Um …. no

        The traveller (i.e. you) are responsible for properly summarising your overseas purchasers on the provided declaration form per the categories therein listed and then Customs’ cashiers calculate the duty based on the information provided and the applicable/corresponding rate.

        So the “next time you want to be smart, check your facts and know what you’re talking about.”

        • Think about it says:

          Another fool that needs to be addressed. As @Joe blow says below, the actual C.A.P.S. system calculates the duty. What I am trying to get across to you is that customs officers don’t have to calculate ANYTHING unless YOU and the general public LIE on your C.T.D. and they find items that you didn’t declare and have to find the additional duty amount.

          And I don’t care what you say, I don’t know anyone stupid enough to go on a shopping spree and not calculate their own duty before they come back so they know what they owe

      • Onion says:

        Funny though how I’ve been erroneously corrected about my duty from the “cashiers”, and it was claimed last year that Customs had problems getting people who could pass the math tests…..

      • Joe Blow says:

        Duty is calculated via the CAPS system. The passenger is responsible for writing their totals in under the appropriate classifications. The CAPS system then take those figures, takes into account the value and any allowance claims, and generates the amount of duty owed. So, neither the passenger OR the Customs clerk calculates the duty, it is computerized.

        • Think about it says:

          Thank you for clarifying for the mouth breathers

        • Get Real says:

          FYI Joe Blow, neither is used with NOR not OR. It’s either/or and neither/nor.

  12. What says:

    Any “tough” choices are made tough beause the government has no money, just a huge pile of self generated stinking debt. My error, we the people of Bermuda have this stinking debt. The plp involved will be long gone before it is paid off.

  13. Rick Rock says:

    They lurch from one knee-jerk idea to the next. Nothing is thought through. They have no plan. No strategy. No ideas.

  14. Tough Choices says:

    Seems to me that was the term she used when she announced that MP’s would not be taking a pay cut.

  15. This lady is truly scary says:

    I used to think she was just a cog in the Brown machine. But she’s convinced me that she is truly incompetent.

  16. JUNO says:

    I still won’t be buying bda. I am a 30 year old female who only buys food here because i have to eat. I just came back from abroad and bought back everything, right down to pampers. Which i would pay close to 60.00 dollars (a pack of 56) i got them for 10.00 at the register i got an additional mark down price so i paid 5.00 dollars for a pack of 56 pampers u bet your A$$ i bought two cases back.
    Its not so much the prices it is the lack of variety.and half the stuff in town looks like a blind person picked them out. fashion really suck her especially for fuller figure ladies. I make sure i plan a trip at least every 6 months so i could stock up on items.

  17. THE HELL says:

    the question is who does this really benifit, and how long will this duty change take effect. Hopefully it will change after the next election when their dumb asses are out. The cog is up our butts.

  18. Soooo says:

    Sooo what “expert” are they gonna hire to tell them what the “Retail Sector” contains….

    According to the City of Boston it’s any business that supplies goods or services directly to the general population…

  19. MinorMatters says:

    In all fairness to the Bermuda Merchants, I try to buy most of my items here because I understand the link that my shopping abroad bolsters someone else’s economy economy instead of my own. I shop the sales only. It is true from a clothing perspective when buying the same name brand in Bermuda – it can be cheaper. Most people fail to include the cost of a flight, accommodations to their basket of goods. Factoring that in the cost and Bermuda is cheaper. However, my big concern here is that this payroll relief is equivalent to a bail-out. The merchants are under no obligation to pass any savings on to me as a customer even though I as taxpayer am helping to line their pockets. Some of these merchants will have the temerity to even raise prices while getting a tax break. So while the learned Minister of Finance would like to call this a stimulation package/move, it will have the complete reverse effect on me. I am not buying anything other the food, gas in Bermuda until they re-think their whole knee jerk response to a major issue.

    • Think about it says:

      The issue isn’t really the price of the goods, it’s the selection. There is no variety when shopping here.

      • MinorMatters says:

        It’s academic -the number of potential customers in Bermuda cannot support the variety, selection and diversity that Bermudians want. Many manufacturers sell goods in lots of a certain size that exceed the requirements of the Bermuda Merchants and cannot be broken down which means the selection is not there. If it is selection that Bermudians want then they have to shop either online or abroad. Very simple. When selection is not critical – some items factoring airfare, accommodations etc is cheaper to purchase in Bermuda. I prefer to buy here so that Mrs. Employee can have a job rather than shop offshore and be forced to pay higher taxes to pay for unemployed benefits aka Financial Assistance. Who didn’t see this coming?

    • JUNO says:

      I don’t really factor in accommodations or ticket leaving the island is the best thing that could ever happen to me.

      Best part of this island is leaving it even if it is to spend 3000k in two days

  20. MinorMatters says:

    I just read the Premier’s comment: “…On the customs duty changes at the airport, given the time required to make system changes, including the changes to bank kiosks at the airport that are used for payment of customs duty, the recently announced changes to the customs duty on goods accompanying residents when they return from overseas trips will have effect from November 4, 2011.”

    What a load of crock! The Bank systems do not perform any calculations, so no change there. The clerks all use a calculator so the only change there is that they have to hit the ’3′ key instead of the ’2′ key. What is she talking about? Perhaps the real reason is that someone whispered in her ear that perhaps she needs to give people more notice, particularly those who were off the island when this lightening duty increase was imposed…I hope the reason is something more sensible than the above utterances.

    • EXPress says:

      Well I remember once upon a time……..the exchange rate at the airport was calculated daily…..Fridays rate used for Saturday and Sunday. Now in the modern age of computers and electronic banking it is done once a week….Wednesday to Wednesday!!!!

      We are slipping back into the stone age………….I wonder what they would do if the computers stopped working?

    • Say Say Say says:

      Not sure what kiosk you are using mate but I 100% guarantee that the HSBC kiosks at arrivals calculate your duty. They will have to be modified by the bank.

  21. Bermyman says:

    Simple solution, just internet shop!

    Does she think that people will now buy more in Bermuda because of this??

    Surely Groceries is where we need the relief, I assume they are not classified as retail.

    I guess those that are economically hard up will not be travelling, so this legislation should target only the employed, fincially well off. But what I don’t understand is how is this helping the overall Bermudian and how will it generate appropriate tax revenue’s for the Government!?

  22. bda says:

    To bermyman..
    “but what i dont understand is how this is helping the overall bermudian…”
    well lets start with the simple FACT that retail ONLY employs Bermudians.. this enough is huge! think about how many ppl work in the retail sector, thik of how many bermudians would be unemployed if Bermuda’s retail failed bc everyone shopped on the internet? yes that may seem like it doesnt effect u personally bc maybe you dont know anyone that works in the retail section but its such a knock on effect… without retail why would any international business come here? there wouldnt b anywhere that the ppl they bring here to do business can shop? which not only does retail fail, international business fails… if all internatinoal business fails then think of how many homes will become unoccupied that was once rented from a bermudian.. how many cars will not b on the road (less revune for gment).. how many less kids will b in private school (less money circulatin in bda)less people dinig out (restaurants will lose money in turn lose staff)… etc etc.. the list is such a long domino effect… and ppl need to realize this.. yes bda may not have the best selection i know that, i am well aware of that…but this is bda, we are catering to 70,000 ppl max not millions like the states.. we cant afford to have the selection.. (im sorry this letter probably doesnt flow) also, when it comes to bda prices vs away prices.. think of economies of scale.. they can afford to buy in large quantites vs what bda can bc again we are catering to a tiny amount of ppl compared to them… the only way bda will come out of this is if we as bermudians to it together…

    • Bermyman says:

      I understand what you are saying but the simple fact is that Retail struggles in Bermuda because of poorly managed inventory, they overcharge, they over employ and they sell things that will not sell.
      Why has the sector declined?? It is about providing the consumer with what they want. It is all well and good, but most people in a recession are looking to save $$$ and if that means buying things off of the internet instead of Bermuda then that will happen. I appreciate we need to support Bermuda and Bermudian jobs; yes the retail sector employs a large amount of Bermudians. But this sector receives widespread criticism for poor customer service, over pricing and poor shopping experiences in general. You cannot force people to spend money and buy things if they don’t want to, hence why the sales person is an important part of the retail process. Soooo according to your logic, the sector that is most widely criticized on the island and has had the most notable decline not just in the recent recession employs ALL Bermudians. Funny that!!!! Save that for another discussion shall we! By your logic, IB is here because they need retail! Wrong! IB is here because they make $$$ without income tax, very simple. We have retail in Bermuda because we have a local marketplace that needs to be serviced and let’s face it we all cannot buy everything we need while we go away, if we go away at all. Essential items will continue to be bought in Bermuda in a recession, luxury items most likely will not. What the retail market really needs to support it is a thriving tourism industry that does not rely on Mickey Mouse, nickel and dime cruise passengers that spend next to nothing on our shores. But that became the focus market under the PLP. Where have our tourism $$$ been spent? We need to give Hotel developers options to have casinos on site, which we have not done, we need to modernize our tourism product, which we have not done and have no plans to do so while the government dithers. The economy needs to be turned around not patched by band aids in the form of stealth taxes. We would have no duty increase in the first place had the present Government actually financially managed this country correctly. Instead they put us billions in the hole and our previous leader walked away with a chunk of that through the leaky cracks of back handed deals. Got to ask yourself, does the government know how to run an economy? Why was payroll increased in the first place and how much damage was done to companies like CITI group from that initial tax increase by Paula Cox? That did a lot of damage to every business on the Island at a very tough time. But how else was the Government going to pay for their financial mess. We hardly have enough money to keep schools open and busses running under the PLP!!! We need to Vote them out now, they don’t know what they are doing and we will pay the ultimate price for it. But we could talk about the underlying problems that have lead to this forever.

  23. EXPress says:

    I wonder if people even have a idea how much money we are talking about….I was not sure so I looked it up, lets take June 2010 and June 2011 estimates as posted on the chamber of commerce’s web site

    local sales June 2010 – $93.1M

    Overseas Purchases 2011
    Declared by
    Returning Residents – $5.7M

    —————————————

    local sales June 2011 – $90.6M

    Overseas Purchases 2011
    Declared by
    Returning Residents – $4.9M

    Also overseas purchases last December $8.0M worth of purchases was declared
    and $106.6M was spent locally!

    How much of that $106M was sold by “retail” (What is retail sales, I guess we will soon find out)

    Oh and I had to put this in

    From the chambers site

    “Ongoing discussions with the Ministry of Finance include:

    .Duty free shopping.

    .Raising the rate of duty on all goods entering the island to 25% or 30% unless presented with an importer ID number that is backed by a payroll tax ID number in an effort to level the playing field. “

    • EXPress says:

      And that is ALL GOODS IMPORTED by anyone other than “An importer with a ID number that is backed by a payroll tax ID number” meaning if they pass this, your zipx and mailboxes will not help you get the better duty rates!

      “Ongoing discussions with the Ministry of Finance include:

      .Duty free shopping.

      .Raising the rate of duty on all goods entering the island to 25% or 30% unless presented with an importer ID number that is backed by a payroll tax ID number in an effort to level the playing field. “

      Can you imagine the fuss we Bermudians will if this suggestion ever gets the STAMP!

    • Sandgrownan says:

      The last bit is worrying.

  24. concerned in bermuda says:

    how about the retailers lose the attiture problem they have when someone walks into the store.. it always seems like i am disturbing you when i am coming in to spend my money.. if u have the attitude, then i will go elsewhere to shop.. no matter how much the governemnt will raise the duty to bring things in.. u cannot force people to purchase things for 5 times the value .. even after taxes and duty and import costs, the items still cost way more here.. wake up bermuda retailers.. the consumer ALWAYS has a choice and the choice is not to purchase from you…

    • Mike says:

      You are disturbing them for goodness sake. Lol.

      The Government has had 39 months of declining retail sales in which to do something. They haven’t until now, because ‘now’ an election is close.

      And if anyone thinks that raising duty by 10 % points will force people back to the local shops, then as the saying goes, “I have a bridge to sell you”.

      This is both electioneering and a desperate attempt to find some money – from somewhere.

      In 3 months time (when the retail sector is on it’s 42nd declining quarter, we will know.

    • Wondering says:

      I don’t find this at Cooper’s Harborside at Pier 6 on front Street – Mrs. O’Connor is top brass and is always willing to assist and encourage you….. I love shopping there because of Mrs. O’Connor

  25. Not falling for it says:

    This will create further consumer backlash. The government found a way to increase their own revenues while pretending to help the retail sector. This will not increase retail enough to make a difference. Just because someone chooses to spend less now overseas because of the increase in duty does not mean they will go and spend their money here. They just simply won’t spend. I would love to be a fly on the wall and listen to how these people come up with such brilliant ideas. If only…

  26. The Rock says:

    i don’t get to shop here because the stores are closed whenever I have I time to shop!!!!