Image courtesy of Australian Customs and Border Protection Service.
The import supply chain will feel the sting of the Federal Budget, writes director of advocacy body Freight & Trade Alliance (FTA) Paul Zalai.
The government will restructure the Import Processing Charge (IPC) to recover the costs of all import related cargo and trade functions undertaken by the Australian Customs and Border Protection Service.
For consignments valued over $10,000, the IPC for electronic sea import declarations will be increased by $102.60 to $152.60 per consignment; and the IPC for electronic air import declarations will be increased by $81.90 to $122.10 per consignment.
For consignments valued over $1,000 and up to $10,000 the IPC will remain at current levels: $50.00 for electronic sea import declarations and $40.20 for electronic air import declarations. The IPC is not applied to consignments valued at $1,000 or less.
The new charges will come into effect on 1 January 2014.
The magnitude of the IPC increase is staggering, and I have concerns about the extent of consultation by the government on this issue. While the rationale for imports to cross-subsidise exports is generally accepted (allowing exports to be exempt from IPC), however, the need for the same model whereby commercial import consignments are subsidising low-value consignments exempt from IPC now needs to be seriously questioned.
While retailers have been making strong arguments against the notion that internet trade should be exempt of paying duty and GST, I am of the view that the ‘sleeper’ in public debates to date has been the fact that low-value consignments are also exempt from IPC. Perhaps the government has awoken the sleeping giant and this will resurrect arguments of equity and fairness of tax-free low value consignments.
While commercial importers will now either wear this cost or pass it on to the end consumer, there are other intermediaries affected by this.
Customs brokers commonly pay duty, GST and IPC on behalf of importers with periodic invoicing to recover these costs along with service fees. It is not uncommon for smaller to medium-size customs brokers to complete 500 to 1,000 import declarations per month. In an already highly competitive marketplace, where are they going to find the cash flow to pay the additional hundreds of thousands of dollars per year for IPC(105)
