Standard customs tariff system absent

A harmonised customs tariff system
that would allow government to more accurately predict how much money it
expects to take in from customs duties each year appears to be going nowhere,
more than three years after it was introduced as proposed legislation.

The delay in implementing the new
system seems to have baffled local customs officials, who told a meeting of
Cayman Islands Chamber of Commerce members last week that “political will”
seemed to be the only thing holding up the introduction of the tariff system
that is now used by most of the Western Hemisphere.

“The customs service has undertaken
a number of presentations to Cabinet,” Collector Carlon Powery told Chamber
members at the Westin Casuarina hotel Wednesday afternoon. “Really and truly, I
don’t know what is holding it up.”

One of the main reasons for
implementing the more detailed list is needed, customs officials said, is to
predict with more accuracy how much revenue from tariffs government will make
each year. With no direct taxation in the Cayman Islands, customs duties are
one of the public sector’s main sources of yearly earnings.

The existing Customs Tariff Law
(2002 Revision) lists the tariffs or duty an importer must pay before taking
possession of goods that are shipped to the island. The list is a little over
nine pages long and contains 22 separate sections for items like live animals,
vegetable products, textiles, footwear, food, wood products, cars,
aircraft…almost anything that someone would want to ship in. 

The dutiable items list, initially
proposed as part of a legal revision in 2007, contains the 22 similar sections
– but it is more than 200 pages long and is broken into far more detailed
descriptions of imported items.

The 2007 proposal did not call for
a general increase or decrease in import duties. However, there are specific
items on which duties have been added or increased.

As an example, in the Customs
Tariff Law (2002 Revision), the importation of live turtles to Cayman is duty
free. In the 2007 bill importers would have to pay a duty of 50 per cent.

In other areas duties were not
increased. For example, in the current Tariff Law there is one listing under
the category of “prepared foodstuffs” for cereal, which includes breakfast
cereal.

The 2007 bill contained listings
for eight different types of cereals including; wheat, rye, barley, oats, corn,
grain sorghum, rice and buckwheat. No duty is charged on the importation of any
category of cereal.

 “It is currently not known…what is the volume
and value of specific items that are imported and exported to and from the
islands,” stated the Customs Tariff Bill (2007) Memorandum of Objects and
Reasons. “No policy decision can therefore be taken by the government on the
quantity of a specific item to be imported.

“In addition, the government is
unable to calculate how much revenue will be raised or lost if a policy
decision is taken to increase or decrease Customs duties in specific areas.”

The 2007 was never brought before
the Legislative Assembly and passed.

In an economic downturn, this
information becomes increasingly more important, Mr. Powery told the Chamber
members.

Customs collected CI$35.4 million
in tariffs between July and September, the first quarter of the government
budget year. Mr. Powery estimated, based on that figure that customs would end
up meeting its projections for the full year – collecting about $140 million in
duty – or possibly even exceeding that estimate by about $1.8 million.

“There’s tremendous potential to
improve government revenue with the harmonised system,” Mr. Powery said.

Business concerns

Chamber of Commerce members were
not all in agreement about the harmonised system being a positive addition.

Local business owner William Adam
said he thought the new 200-page list of dutiable items was simply too massive
for small company owners to manage, particularly if those companies had not yet
migrated to computerised records.

“So now, you not only have to break
down the item and take it off the invoice, you’re going to have to break down
the shipping duty as well,” Mr. Adam said, adding his concern that the change
could increase the cost of doing business in Cayman.

“The Cayman Islands is not the
cheapest place to do business,” he said. “(This) is going to be very expensive
and time-consuming.”

Assistant Customs Collector Langley
Powery said there had been some reluctance from traders to the harmonised
tariffs system. However, he said once the system is in place, things should go
more smoothly for business owners.