GSD says 10% personal import duty ‘requires more thought’

The GSD has said that the introduction of a 10% import duty on personal goods is “effectively a new tax that will hit people’s pockets."

The party said it is not in favour of the duty’s introduction in this blunt form, adding that measures need to be more targeted to help boost the local economy by encouraging shoppers to buy locally.

The Opposition said the Gibraltar Government had failed to consider the policy effects of such a “sweeping tax” which has meant personal imports of books, educational material, musical instruments, pet food and medical supplies now attracts a 10% tax when previously it was zero.

The GSD has noted the Chief Minister Fabian Picardo’s announcement to the Gibraltar Chamber of Commerce and Gibraltar Federation of Small Businesses of a 10% personal import duty, but considers this measure, which is hoped will encourage more local buying, “requires more thought.”

“The measure is effectively an extension of the dual duty system that exists in respect of motor vehicles so as to not to undermine local traders by personal imports,” Roy Clinton, the GSD Shadow Minister for Public Finance, said.

“This coupled with the waiver of duty for businesses for the third quarter will certainly benefit many businesses in Gibraltar.”

“The Government however has failed to consider the policy effects of such a sweeping tax in that it negates some obvious social benefits.”

“Since the only exemption announced is for foodstuffs, it means that for example personal imports of books, educational material, musical instruments, pet food and medical supplies now attracts a 10% tax when previously it was zero.”

“The measures if deemed essential should be more targeted to business lines, it makes no sense to tax books at 10% when unfortunately, we have no bookshops to protect.”

“It might make sense to apply such measures to clothing or sunglasses whose local retailers have to compete with online shopping but even then the idea of penalising people for shopping choices is inappropriate when assistance to the business sector could be delivered through other means.”

Mr Clinton added it remains to be seen for how long the Government intends to maintain this dual import tax system.
“Its immediate impact on the consumer if they do not choose to ‘buy local’ or cannot find such goods in Gibraltar will be an increase in the cost of living as many items are currently zero rated.” Mr Clinton said.

“Indeed an analysis of the duty payable on a basket of items under the old and new system shows an increase in tax of more than 10 times that charged previously.”

“We certainly need to encourage as much of our spending power to remain in Gibraltar to pull out of this inevitable recession, but measures need to be targeted and thought through if they are to encourage a ‘buy local’ campaign.”