Premier Introduces Customs Duty Changes

November 26, 2011 | 14 Comments

In a bid to stimulate the island’s stagnant economy, the Premier yesterday [Nov. 25] formally introduced measures in Parliament increasing the rate of duty payable on accompanied goods imported for personal use from 25 percent to 35 percent.

In addition, the $100 duty free allowance for returning residents will be restricted so that where two or more members of the same household return to the island on the same aircraft or vessel, only one may claim the allowance.

“These measures are intended to discourage personal spending abroad, and to help steer expenditure into the local retail sector, thereby boosting sales and keeping approximately 4,000 Bermudians employed in local stores,” she said.

The Premier said the ongoing effects of the 2008 worldwide recession continue to stymie business growth on the island.

“As a result, business activity in Bermuda has been slow to recover,” she said. “In fact, in many instances scaling back by some businesses and the associated redundancies are taking a debilitating toll on many Bermudian families.

“This is a serious matter and required an immediate response.”

The Premier’s Statement Appears In Full Below:

Mr. Speaker,

Honourable Members are requested now to give consideration to the Bill entitled ‘Customs Tariff Amendment (No. 3) Act 2011’.

The primary purpose of the Bill is to increase the duty rate on accompanied personal goods declared by returning residents from 25% to 35%.

Mr. Speaker, the Bill is also intended to restrict traveller’s allowances for returning residents to one person per household per trip for a five month period ending on 31st March 2012.

Mr. Speaker, the changes affect section 5A and Chapter 98 to the First Schedule of the Customs Tariff Act 1970, which I will refer to as the Principal Act.

Honourable members will be aware that these amendments took effect from the date on which this Bill was tabled in this honourable House – the 4th of November this year – in accordance with the Provisional Collection of Duties Act 1960. The changes will continue in force subject to the agreement of this Honourable House.

Honourable members will recall that in a press conference on the morning of September 30th this year, I noted that the negative impact of the recession which followed the global financial and economic crisis that began in 2008 continues to hinder business growth and development in Bermuda. As a result, business activity in Bermuda has been slow to recover. In fact, in many instances scaling back by some businesses and the associated redundancies are taking a debilitating toll on many Bermudian families. This is a serious matter and required an immediate response.

Therefore, in taking note of this continuing economic malaise and the possible social consequences, Government immediately began to implement several temporary emergency measures to assist businesses that have a pressing need for financial relief.

Mr. Speaker, the retail sector has been particularly hard hit by the continuous decline in sales volume over the last several years. Discussions with industry leaders have been bleak but sobering. The Government is very much aware of the pressure on the retail sector and in this regard in 2010 a payroll tax concession was established for retail stores for the months of January, February and March, recognising that this is a slower period for retail.

Mr. Speaker, also in February this year the Government extended the Retail Shops (Temporary Customs Duty Relief) Act 2008 by a further five-year period expiring on March 31, 2016. This Act provides a zero rate of customs duty on imported capital goods intended for the renovation and refurbishment of retail shops. This exemption has been in effect since April 1, 2008 and many properties have benefited from the Act. Since inception the total value of goods receiving exemption under this concession is approximately $1.7 million. This represents about $420,000 in customs duty savings for shop owners.

Mr. Speaker, with the prospect of immediate layoffs in the mainly Bermudian retail sector, it was important that further remedial actions be taken to assist the retail sector.

Therefore, the following measures were announced for implementation:

  • Payroll tax was set at a zero rate for the retail sector for a six month period ending on 31st March 2012
  • Travelers’ allowances for returning residents will be restricted to one person per household for a six month period ending on 31st March 2012
  •  The duty on accompanied goods declared by returning residents will be increased from 25% to 35%

Mr. Speaker, included in this basket of rescue measures are the amendments to the Principal Act set out in the Bill before us. These measures are intended to discourage personal spending abroad, and to help steer expenditure into the local retail sector, thereby boosting sales and keeping approximately 4,000 Bermudians employed in local stores.

Mr. Speaker, whereas formerly Bermuda residents returning to the Island by air or sea had been entitled to import accompanied personal goods to the value of $100 without payment of duty, this allowance has now been restricted so that where two or more members of the same household return to Bermuda on the same aircraft or boat, only one may claim the $100 allowance.

Mr. Speaker, I should explain that “members of the same household” means, persons living in the same residence, regardless of whether or not they are related; and so includes persons living in the same residence due to an employer-employee relationship, a house-sharing arrangement, or for any other reason.

Mr. Speaker, I would take the opportunity to emphasise that the $100 allowance restriction is intended to be of limited duration and will end on 31st March 2012.

Mr. Speaker, I should also point out that other duty free allowances available to arriving passengers are unaffected by this change. For example, each passenger is still entitled to import one litre of wine, one litre of spirits, 0.5kg of tobacco, 50 cigars and 200 cigarettes without payment of duty every time they arrive in Bermuda.

Mr. Speaker, I now turn to the new 35% duty rate for accompanied goods. While most accompanied goods are caught by the up-rated duty, ‘zero-rated’ goods are unaffected by this change – these goods (such as books, medicaments, spectacles, hearing aids and medical appliances) will remain dutiable at 0%. The duty for accompanied personal cigarettes will also remain unchanged at the rate of $35.00 per carton of 200. Nor does the duty rate increase applicable to passengers affect importers of commercial goods. Goods imported for retail sale or goods for use in a trade or industry remain dutiable at the applicable First Schedule duty rate.

For the avoidance of doubt, there has been no change to the Customs Traveller Declaration (CTD) form. Arriving passengers will continue to make their CTD in accordance with the guidance on that form. Likewise there will be no change in the currently available methods of paying duty. Arriving passengers will continue to have the option of paying import duty in excess of their allowances at either the customs cashier window or online by Automated Teller Machine or Kiosk.

I shall comment further on these provisions in Committee.

Thank you Mr. Speaker.
Mr. Speaker,

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Comments (14)

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  1. Fact! says:

    Raise the duty all you want! Me and many friends are voicing our opinion on this by REFUSING to buy ANYTHING local. (except groceries) Many of us have expendable incomes and by being told where we are to spend it is ridiculous and extremely arrogant. How dare you tell us how and where to end our hard-earned money!?! We will show you what we think about this new legislation!!

    A VERY MERRY $$$$ Christmas to our new friends at US Express and Zip Ex - see you next week to pick up our thousands of dollar orders that we all placed yesterday! And YES, we will be paying lower duties and we will be saving money. (Most retailers have free shipping in the US - all we pay is shipping to Bermuda - a MAJOR savings over buying BDA!!!)

    25% duty was ok but as usual, the gover(n)ment got greedy and now wants 35% - there was a fine line and you just crossed it!! Beware the power of consumer behavior and purchasing power. Retailers have the PLP to thank for this! Sorry!

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    • Legal Reasons? says:

      +1

      Cyber Monday in the US in 2 days... Looking forward to spending $2K+ and bring it home with Zip Ex.

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      • Yup says:

        If UBP had done this, PLP would be screaming that UBP is protecting their business buddies!! So now what is going on? PLP is out UBPing the UBP.

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  2. JB says:

    Does the PLP think we are stupid. What a great way to raise additional tax revenues! Bermudians are not going to think twice about still buying overseas even with the 35% duty. I know it and the PLP know it. The deals in the US are incredible and Bermudian retailers are simply not able to offer the deals or the VARIETY. How can Paula Cox says we have to shop in Bermuda to support our economy. I try so many times to buy Bermuda but come up empty handed due to the lack of choice or over priced goods. I buy shoes online because local stores do not carry the styles I like or during the time of year I want to buy them. I buy electronics, movies and books online simply because of choice, no dock delays and reasonable prices. It is our right to be able to choose where we shop.

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    • Yup says:

      There are Bermudians over 65 who are doing very well. Yet they pay no land tax. What is that? So a 65 year old Bermudian millionaire pays no land tax, and some of their homes are massive, and at the same time I have to pay tax, AND I JUST LOST MY JOB! Why can't PLP be a truly labour party?? Why do they have to be like UBP? Why can't PLP say that if you are over 65 and you want to be excluded from land tax, then (complete an application and)pass a means test. Lying on the means test would be punishable with a hefty fine. If PLP did all this they would collect loads of money from those who can better afford it. PLP is out of touch!

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  3. Triangle Drifter says:

    Poor Paula. She is at war with the very people who voted the PLP in time & time again.

    She has out UBPeed the UBP nailing the little guy & his little flutter overseas occasionally to help business.

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  4. smile says:

    Use bda express they are wayyyy cheaper than zip, go to bdashipping.bm to sign up. They have a great team of workers and very friendly staff.

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  5. blockade runner says:

    Bermudas evil airport arrivals is the WORST thing about Bermuda. This new tax, like everything else in airport arrivals, is yet more tyranny over Bermudians. Bermudians are individuals, with tastes and hobbies impossible for local retailers to cater to entirely. Airport arrivals costs an hour for fascists to tax our souveniers as it is,and it seems theyre innefecive stopping guns and drugs. Bermuda is better off knocking airport arrivals down so we can go home with our families or to the beach today, without a first experience of the government sponsored hate that sours this whole society.

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  6. Rick Rock says:

    I'd put up with the extortionate tax at the airport. It's the untrained halfwitted jackbooted sadists up there who waste your time that pee everyone off.

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  7. David E Chapman says:

    Good thing the Premier is not in this for a popularity contest... The "sadists' are the ones who see her actions as somehow vindictive and personal rather than an effort to help the greater local collective and not simply individuals of any one cloth, creed or class.

    For those of you that do not agree with this increased duty policy, I would like to hear your alternatives to helping the local Bermudian retail collective to retain and/or increase short term earnings towards the greater good of strengthening the economy, retaining foreign exchange balances and improving job prospects. All country's that value their local economies and that are facing threats from higher rates of goods importation, both large and small, use duty as an incentive to encourage local purchasing. Of course, one has to be sensitive to not being extortionate but as this is only applying to accompanied personal goods, in reality those who need to declare duty for more than the periods of allowances she has defined most likely can afford to pay it anyway.

    Seems reasonable to me. But then again I am not a consumerist.

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    • Pitbull says:

      WELL!!! She can raise the duties. It will not deter me from shopping overseas.
      I will not be shopping here toooooo expensive and the variety abroad is much wider this really does feel like a punishment of some kind. I'm sure that she shops abroad. tell me that she doesn't????????????????

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    • JB says:

      The Premier has a difficult job to appeal to her voters, fix the economy destroyed by Ewart Brown and his blatant overspending and try to raise enough tax revenue to pay off debt while keeping all the government workers employed. But the fact remains "Bermudians are individuals, with tastes and hobbies impossible for local retailers to cater to entirely" as Blockade runner put it. So my suggestion is to severely reduce the restrictions on work permit especially in the Int'l Business sector and bring in new bodies to pay taxes, spend money in the local economy/retail sector and rent our empty apartments. Quite simply if any more expats leave our economy will suffer a lot more. It has a huge knock on effect. We need the IB to support the whole economy.

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  8. Rockfish#1 and #2 says:

    Cox may wish to consider asking Brown, Correira, and DeSilva for a generous donation in this,our time of need!

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