The Customs user fee proposal

The green paper on tax reform has several proposals related to the customs department.  The first of which is the suggestion to charge a customs administration fee (CAF) of 5 per cent by consolidating five existing fees; customer user fee, processing fee, environmental levy, standards compliance fee and additional stamp duty (ASD).  However the paper itself suggests that the CAF may not be permitted under World Trade Organization (WTO) regulations.  It is uncertain whether or not this new fee would be an increase on what is currently paid but other questions do arise.  It seems to me that two of these fees were implemented with a view to funding specific agencies: the environmental levy for NEPA and the standards compliance for the bureau of standards.  If the intention was to have these agencies be self sufficient through this means then under the new regime would these agencies now be funded by the state? 

There needs to be a careful balance between simplicity and the most effective way of imposing charges.  Why should all items incur the same rate (5%), and how does this create equity in the system?  To clear a container of paper tissue may be much easier than to clear a container of chemicals and may need the same level of safeguards especially those related to the environment and standards.  It may be that the more effective way to charge is to do so based on the actual time and/or the complexities involved. There is another proposal to keep the ASD separate and to use it to protect sensitive industries such as agriculture.  Is this one way of dealing with the concerns raised by that sector and what would be the maximum ASD chargeable?

There is also a suggestion that the CET on those items with rates above 20 per cent should be reduced to 20 per cent.  There are over 600 and this would require individual approval by Caricom countries.  Again I have to ask the question why 20 percent was chosen and what is so special about that rate?  Is it in our interest to apply the same rate of tax to all items?  There are situations in which the government may wish to have higher rates to discourage certain imports, for example items that are not energy efficient or items that are harmful to the environment such as some plastics and pesticides.  It is just as easy to calculate tax at 30 per cent as it is to do so at 20 per cent.  Having different rates is not the problem it is having too many different ones and that is the situation that now exists.  One can solve the problem by doing away with the numerous variations in rates and having just a few.

At the end of the day the consumer has one concern, if the government reduces taxes on customs will the savings be passed on to the public or will it simply line the pockets of the wealthy few.