I’ll start with the direct quote from your Finance Minister’s budget statement on Friday 30 September, 2016:. “Madam Speaker, 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. There are 31 Courier Companies registered and bonded in Trinidad and Tobago and is estimated that the value of packages cleared by these Courier Companies exceeds $1 billion a year “
Personally, I think your Finance Minister and his entire government are all incompetent, but that’s just my opinion and I can write an entire article about that. But I’ll stick with the topic at hand.
Online Tax is a punitive tax, not incentive
Now it’s what he DIDN’T SAY that spoke loudly. He did not say ‘local online industry’ or acknowledge it exists. What he could have said was: ‘Reducing the demand for these items helps to save on foreign exchange and to assist local industry both online and off‘. I really doubt that he was trying to save on space.
My dear readers, this is very telling. This government has no interest in, and is ignoring local E-Commerce. However, they are busying themselves is setting up E-Services that include, also as stated in the budget statement, “more efficient electronic payments solution”, which I guess will help them be a better government.
OBJECTIVE 1: 'Reducing Demand'
I wonder what formula he used to come up with lucky seven as the magic number? It’s quite possible that he designed the complex algorithm himself that spat out this precise figure; not six, not seven and a half, NAY seven, and Trinis will be shut down their computers and flock to the stores in droves. Eureka!
It’s hardly likely there’s a ballpark figure or percentage set to measure if the tax is working. Courier companies are already reporting a dramatic drop in container imports out of Miami, and that’s attributable to the economy. How will he tell the difference between two.
OBJECTIVE 2: 'Save on Foreign Exchange'
I have news for him. Individuals are importing the products instead of wholesalers, there is no saving of foreign exchange. While Trinis import directly from the US when they Skybox, our local merchants import containers from China. Everything in this country is IMPORTED, the foreign exchange is going to leak one way or the other, but nothing is being done to address where it’s FLOWING.
OBJECTIVE 3: 'Assist Local Industry'
Things that make you go hmmm… whatever do you mean pray tell? Local importers, manufacturers, or your buddies with big business? My guess is that it’s the latter pulling the strings here. It’s all politics, the nasty Trini version, and we all know it.
I can tell you what the local industries that need to be ‘assisted’:
- Large scale industries that can free up the need for foreign exchange, like agriculture and manufacturing
- Small and micro, productive enterprises
However, it appears that the only industry being assisted are those already draining the foreign exchange.
Electronic Transactions Act (2011) still languishing
The immediate, glaring example of local E-Commerce going from the backseat and in into the trunk is the fact that the Electronic Transaction Act (2011) hasn’t been touched since 2012 when Part VII was proclaimed, i.e. it came into effect as law. The other half of the Act remains unproclaimed. The only place left for it to go under the spare next to the jack, or worse just throwing it out of the car altogether.
I get it, the government has a lot on their plate when even a small amount is too much to handle. However, the fact that local E-Commerce wasn’t mentioned for the sake mentioning or for the sake of pandering, is a clear signal. It only emphasizes the point that we’re not to look to them for any support anyway.
Online Tax gives no incentive for local online stores
The 7% online tax is targets the Trini consumer, end of story. The government is saying ‘You buying too much outside, never mind that we’re not doing anything to encourage the same thing here’. All it does is force us to buy the cheap shit selling locally. It will do nothing to encourage more online stores as it only seeks to protect regular business.
Now the minister said one of the reasons was to protect local industry and didn’t go on the explain who that is. Also strange is the quick solution and implementation from a government that likes to ‘look at’ and ‘study’ long and hard before they act. Miraculously this ‘measure’ was a no-brainer (and that works both ways).
Online Tax won't stop online shopping on US sites
The government is in for a big surprise. All they’ll get is additional tax revenue but it won’t reduce the demand. Trinis prefer to spend for quality and convenience than visit local stores with their sour-face employees and Chinese knock-offs.
It’s very clear that the question of WHY Trinis are shopping on US sites in the first place is not being asked. That’s because they already know the answer and don’t care, all they care about is that it should stop, and in their misguided and ill-advised minds, they believe taxing it to hell is the solution.
That’s why it won’t work, because tax is for the symptom, not the cause. Such an approach WILL NEVER WORK.
Online Tax can't work in a vacuum and there is a case for it still
Again, for a government that likes to ‘look at the situation’ before they implement ‘measures’, this measure in particular was thought up and implemented in record time. However, this kneejerk action to appease and protect elite business cannot work by itself. It’s going to have some effect but it will be insignificant.
1. Investigate the source of the problem
I mentioned before, Trinis want inexpensive, quality items purchased in a convenient manner. We are not getting that here, we’re getting either cheap knock-offs or third-world versions of products sold at prices for the real things. Local stores are notoriously customer-averse. If the government will bother to check, this is the place to start.
2. Replicate the experience here
Brick-and-mortar stores exist alongside online versions of the same stores in the US without cannibalizing their own sales. Local E-Commerce needs to be get up and grow, and there is no rocket science involved people. Trinis want the American experience and the merchant who commits to delivering that, well, customers will be on him like a foot on an ants patch.
3. Cultivate the environment
This ‘wean yourself off the government’ bullshit don’t fly by me. You beg for the job, canvassing up and down the island, now you saying go help yourself? The relevant government departments, agencies and agents need to get up there asses and do their jobs.
Proclaim the rest of the Electronic Transaction Act, roll out the postal codes, implement incentives, not ‘punitives’, develop supporting systems. I’m not advocating handouts and welfare here, just smart governance. Is that too much to ask? Snort, I actually asked that like I don’t know the answer!
The case for it is that there is no denying the multiplier effect that occurs when the money circulates here. You buy from a local store, the owner makes money, the workers get paid, and the currency mostly recycles within the economy. When we buy online, that happens elsewhere, so yes it hurts us. But like I said, the solution can’s exist in a vacuum.
Well that’s your government ‘working’ for you. You may have figured out that I’m no fan of this administration. I’ve lived long enough to see successive regimes of both parties struggle to manage our island speck with just over a million people. To this day no government still can’t provide basic services, monopolies like WASA and TTEC can’t make money and the list goes on. So my expectations of this and future regimes are less than zero especially as it seems we’re sourcing our leaders from the same single latrine hole and I make no apologies for that statement.