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OPINION: Should importers carry the burden of new taxes and fees?

by maciasd last modified Feb 05, 2013 10:33 AM

FTA founder Paul Zalai tackles this question and addresses comments from Lloyd's List Australia readers, in his weekly opinion spot.

  
OPINION: Should importers carry the burden of new taxes and fees?

Paul Zalai

A recent blog referring to the Port of Melbourne Corporation Port License Fee (PLF) generated some interesting responses from readers introducing other related issues. If we accept the fact the state governments are using port assets to generate additional revenue (either through privatisation or increased fees), then the next question is who should pay?

My argument is that any new fees should be incorporated into existing port fee structures (as per the PLF) rather than a myriad of fees across the supply chain. The next question is whether such fees should apply equally to both import and export freight.

In a responding to a reader from my previous blog, I noted that a federal level, Customs and Border Protection apply cost recovery fees on imports only and cross-subsidise exports which are exempt from any fees. There seemed to be a view from some readers that this approach has merit.

Ben was one of the blog respondents who noted that exporters should be supported in all possible ways by federal, state and local governments “This is the case in many countries, especially developing countries that see export based industries as employers and generators of precious foreign exchange. In many cases, including China, exporters are recipients of government grants and direct subsidies which help them to remain competitive in global markets. As a result the country and society get direct and indirect benefits of keeping exporters afloat.”

Ben also stated that authorities in Australia are targeting exporters for easy revenue via monopolised service providers, offering “no escape routes” for exporters “Exporters in Australia are suffering. High dollar and high wages are rendering exports uncompetitive in global markets and now Australia is basically an exporter of commodities. Falling exports of manufactured goods from developed countries are in congruence with decline in manufacturing industry and society is paying a price for it. Growing unemployment in Europe and USA is a proof of this and it leads to social problems that set in the rot in society. There are people in UK who have not worked for three generations because the grandfather lost a job that was shifted to Asia, the father could not get one despite trying and the third generation did not even try to find one. If we need jobs to be maintained and created in Australia, we need robust manufacturing capabilities to make products that are competitive in global markets. To keep the jobs in Australia we need to support our exporters, not penalise them.”

Ben also highlighted that every container exported out of the country proves that an exporter is willing and able to compete globally “Don’t kill that spirit by robbing exporters of every dollar. If the government needs more money, then it should increase import duties, impose more tariffs on import containers rather than penalise exporters. As such importers are enjoying benefits of a positive exchange rate so why not ask them to part with some of the extra money they are making rather than bleed exporters to death.”

Whilst imposing more import tariffs and duties is perhaps unrealistic in an environment of increased free trade agreements, the concepts raised by Ben are well noted. Should importers carry the burden of new taxes and fees or should this be shared across the entire international trade sector? Your views are important so that they can be considered and incorporated into FTA submissions to government - for more detail, please refer to the “ADVOCACY” tab at www.FTAlliance.com.au.

What do you think? Have your say. Click here to add your comment (anonymously, if you choose!)





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Is every import bad for the economy?

Posted by bens@wcbf.com.au at Feb 07, 2013 09:49 AM
I am not going to be converted soon to support all importers but the next issue in the debate is - Is import really a bad word?
Like all answers related to economics, the short answer is - it depends.( That's how I passed ECO 101 !)
It depends on what is imported and for what purpose. A lot of countries import goods , services and now with open borders even human resources to meet short and long term skill shortages ( Yours truly falls in this category. Australia is third country I am working in!)
Japan ,as we know, is a resource deficit country and imports a lot of coal, iron ore, petroleum etc and dominated global trade in cars, capital goods, electronics etc.for a long period. Same story is being repeated in China, India and many other countries who import products , add value to it and export them to other countries.
Countries have policies to manage this by allowing Free Trade Zones to operate free import/ exports, they also allow duty free import provided the goods are re-exported after value addition etc.
This provides employment opportunity, increases industrial output, earns forex just like any other export.
This proves that not all import is bad. If an Australian exporter is importing plant and machinery to manufacture and export value added products , they should be able to import the product at concessional or zero duty to make the final product more competitive in global markets.
The next question is what is a bad import ? This is where the debate gets interesting and it is hard to draw a line between good and bad. What is bad for a manufacturer may be good for consumers. Cheap imports can kill an industry but the consumers can be happy because they save money . Textile is a classic example. Not many developed countries have much textiles being made within their borders but consumers can afford more / cheaper clothes because of cheaper imports from least developed countries because imports from these countries invite even lower duties.
Next time you pick up a pack of frozen spinach from supermarket - see the country of origin on it. 90 % chances are that it is imported. Pick a jar of strawberry jam - same story. I am told that it is cheaper to import bulk frozen orange juice than buy from farmers in Mildura.
How can it be more viable to get Chinese frozen chopped spinach in supermarkets in Australia? What are the implication for the local farmer who was growing spinach. Same is now true for potato farmers. Potato chips in Australia are being made from imported potatoes- mostly from China. All you see on label is – made from Local and imported products. It does not tell where is each ingredient from and what proportion is imported. Probably 100%.
Probably you have already stopped bothering looking at clothing labels for provenance - it changes every few years depending on the cost of labour and once can see new countries pop up on these labels.
The story does not stop at supermarket shelves. You call the free phone number and it is answered by someone in India or Philippines. Your insurance claim is settled by an agent sitting in another country.
Where does the line get drawn? Who draws it - policy makers, industry, society ,individuals ? Probably at every level .
Don’t get me wrong. I am a supporter of free trade and have made a career out of it but there has to be a line drawn at some point. For me the line is drawn when import is detrimental to local business – irrespective of volume and value.
Why should any import be exempt from import duty? Why should someone who buys an expensive shirt online from a US retailer, be importing it free when a local retailer has to pay duty on it.
An import is an import. Just tax it on a sliding scale based on the end use and use the revenue to improve infrastructure for export.
How good would that be!

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