Tuesday, January 16, 2018

Online tax heading toward $70m

Shoppers: Still cheaper to buy online

FILE - In this March 5, 2012 file photo, consumer credit cards are posed in North Andover, Mass. The rate of severely late credit card payments dipped nationally in the first three months of the year, even as banks issued more cards to borrowers with less-than-stellar credit, according to an analysis by credit reporting agency TransUnion. (AP Photo/Elise Amendola, File)

GOVERNMENT is on target with its 2017 goal to generate $70 million from the tax on online purchases.

“For the first six months we've met the target. It's been performing as projected,” a senior Ministry of Finance official told Express Business last week.

The Online Purchase Tax (OPT) came into effect on October 20 last year.

It is imposed on purchases that arrive in Trinidad and Tobago through courier companies or purchases that are brought in directly by individuals via air freight.

Government's reason for implementing the tax?

“The popularity of online purchases has increased significantly over the past few years. Reducing the demand for these items helps to save on foreign exchange and to assist local industry,” Finance Minister Colm Imbert said during his 2017 budget presentation.

He said between 12 to 13 per cent of all foreign exchange transactions are associated with online shopping.
Local foreign exchange consumption, he said, amounts to US$7 billion annually.

There are 31 courier companies registered and bonded in Trinidad and Tobago, and according to the Finance Minister, it is estimated that the value of packages cleared by those companies exceeds $1 billion a year.

The OPT tax is payable at the bonded warehouses before clearance of goods or directly to Customs in the same way that VAT and Customs duty are currently collected.

Shoppers: Still cheaper to buy online

Asked if the seven per cent OPT impeded their purchases online, regular online shoppers insisted that it was still more economical to purchase items like shoes, clothing and toys online than to buy in stores.

One shopper told Express Business last week she was asked to pay $875 for a pair of work shoes at a store at The Falls at Westmall, Westmoorings.

“My final bill, including shipping costs, comes up to around $350,” she said, comparing her purchase to the online experience.

“I know the point of the tax is to encourage people to buy local but if store owners want to mark up their items by 50 and 100 per cent, what choice do we have? It makes more sense to buy online,” she went on.

Another shopper said she avoids paying the OPT by buying items online but asking relatives travelling from abroad to bring in the items for her.

“Since the tax was introduced I stopped bringing in stuff via the couriers,” she said.

Several courier companies said while there was initially a fallout from customers when the tax was implemented, those customers have since returned.

“A lot of customers came back to us and said they still get a benefit cost-wise as something they are made to pay $2,000 for in the store, they pay a whole lot less online. The only downside is that they have to wait a couple days before the items reach here,” a manager at Web Source Company Ltd said.