DUTY-FREE ANGST

RETAIL BUSINESS owners are predicting further losses for their ventures with the Government’s plan to increase duty-free allowance on personal items by 100 per cent, with at least one retailer labelling the move as “retrograde”.

Their businesses, they say, are already feeling the brunt of the migration to online shopping which has mushroomed in recent years. They argue that this measure will only intensify the stiff competition they are facing from global online conglomerates.

“Whoever convinced him (Finance Minister Dr Nigel Clarke) to do that is very retrograde. You’re going back to the ‘70s where higglers could bring in goods at one rate and legitimate businesses at another rate,” said Michael Ammar Jr, who is the director of Ammar’s, a more than 60-year-old department store with three locations in the Corporate Area.

Clarke announced the increase from US$50 to US$100 to jubilant party supporters at the Jamaica Labour Party’s (JLP) 80th-anniversary conference at the National Arena in Kingston on Sunday.

Additionally, the threshold for Jamaicans returning with goods bought overseas is to move to US$1,000, up from US$500.

Clarke subsequently told The Gleaner that the Government will be giving up between $1 billion and $1.5 billion in annual revenue when this measure is implemented next April.

But Ammar has rubbished this claim.

According to him, the Government has not been diligent in collecting duties on the importation of personal items in the first place.

“The truth is [the Government] is probably not collecting it anyway because most of those online shipping companies find a way to get around it,” he said. “You’re giving away something that’s really not being collected for the most part.”

Describing the move as a “political present”, Ammar argued that it should “never have been done”.

He said an equitable measure would be to lower the duty rate so everyone could benefit.

“Everybody needs to be treated equally. If you’re gonna lower it, lower it for everybody or lower it for nobody,” he stated.

Another business owner, who spoke to The Gleaner on condition of anonymity, said: “It’s good for the people, but it’s bad for us.”

The entrepreneur, who operates multiple clothing stores in the Corporate Area, said profits have dwindled more than 50 per cent over the last five years as more persons divert online for the goods he sells locally. And with the high cost of living, he said raising prices is not an option, and he is anxious about further decline.

“It will put down our business greatly. It’s already impacting us with the US$50, so when it doubles, the impact will be greater,” he said. “But we can’t stop anybody from doing anything. It’s a free country, free trade, survival of the fittest, so we might have to cut down, and if we have [to] close down a store or two, we wait and see.”

Calls for the increase in the threshold go back more than a decade with former Commissioner of Customs Major Richard Reece telling The Gleaner in 2015 that the Jamaica Customs Agency was looking at doubling the limit.

Two years ago, Clarke shared that the Government was mulling this move. However, he was concerned about how it would impact local retailers.

“We have to be mindful that the retail space represents the largest part of the Jamaican economy ... and any move we make has to be a move that preserves retail as a viable business in Jamaica,” said Clarke.

Meanwhile, Danville Walker, also former Commissioner of Customs, explained that the duty paid by retail owners depends on the type of items being imported. He noted that duty is applied to the cost, insurance and freight value, to which the general consumption tax is added. This, he said, can go up to about 60 per cent of the cost of the item.

He is encouraging retail business owners to adjust their business model to be better able to compete.

“You can bawl, but what’s your business model? Are you going to just be competing with Amazon alone for underwear and shirts?” he said.

“You need to offer more in terms of service, variety, things you can’t get on Amazon … . That’s where you have to go, because online is here to stay,” Walker said.

And while acknowledging that the increase in duty-free allowance will have some impact on retailers, immediate past president of the Jamaica Manufacturers and Exporters Association, John Mahfood, believes it will be advantageous to customers.

“It will help retailers to focus on getting their prices better, having a more attractive range of goods which will be to the benefit of consumers,” he said.

However, he is suspicious of the Government’s motive in announcing it at the governing party’s annual conference.

“Especially now that we’re nearing the local government elections, they have to be more sensitive to appearing to be political in what they do,” he said.

In the meantime, Rose Plummer, owner of Rose’s Couture in Cross Roads, Kingston, is relying on a loyal customer base to cushion the impact.

“For my store, if somebody wants something, it nuh matter how much, they will still come and buy my things,” she stated.

sashana.small@gleanerjm.com