Anti-SME and anti-growth tax “by stealth….”

“Yet another Government chip against small-medium enterprises…. and a tax against business by stealth.”

Michael Barnett, chief executive of the Auckland Chamber of Commerce, was responding to the introduction of a fee for import transactions that the Custom Service has confirmed will be charged from 1 December 2002.

“I am extremely disappointed and angry that Government is continuing to shoot itself in the foot with revenue gathering measures that are clearly designed to hurt small-medium businesses and can only be interpreted as a ‘tax by stealth’, “ said Mr Barnett.

Why else would the Customs Department make a media release headed: “IMPORTANT CHANGES TO IMPORT CLEARANCE PROCESS” and go on to explain that “the main change is the introduction of a fee for import transactions, due to be charged from 1 December 2002”?

Certainly, the import transaction fee seems small – just $18 (GST inclusive) – but this is on EVERY commercial transaction which will add up to thousands of dollars off the bottom line for importers.

There are also“important” points of principle and detail at stake, he said.

On principle – By imposing the tax, Government is not only breaching its promise of “no new taxes” but is deliberately hitting SMEs in the pocket, while its rhetoric claims to be encouraging them to help build a growth-led economy. “There is a huge contradiction and lack of consistency in Government policy that the Government needs to explain and justify,” said Mr Barnett.

On detail – the tax impacts differently between commercial and private importation. “Private imports under $1000 in value will not be charged the tax, which means they will also escape GST, while every commercial import with a duty and/or GST liability of $50 or more will be charged the tax plus the GST – i.e. a form of double taxation!!”

The tax will penalise commercial imports compared to private imports with the raising of the threshold for the tax from $400 to $1000, and this opens up “private importers” to do many shipments in parallel importing arrangements.

“It’s crazy, it’s punitive against SMEs, it’s inconsistent with the small-scale private importer. It’s time Government realised that building a growth-led economy starts with a sympathetic and supportive approach to our SMEs – the engine room of our future economy,” concluded Mr Barnett.

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