No real surprises in the last night’s 2017 Federal Budget from an international trade perspective. A well balanced Budget in terms of fiscal responsibility and building vital Rail infrastructure for the eastern seaboard of Australia.
Providing this commitment after such a long period of debate must certainly be welcomed by the logistics industry and more importantly, rural Australia. Not only will this investment provide much needed infrastructure to ‘future proof’ this important sector of the economy, but provide much needed economic benefit to our farmers and/or exporting community.
Some notable omissions though, no further funding for the Trusted Trader program, other than the circa $70m provided in last year’s budget covering the current financial year and the next three years of the program. The following statement was included in the Budget Papers for FY17 with this allocation:-
“In addition, from 2017/2018, traders will be able to pay customs duty monthly rather than per import consignment. In underlying cash terms, this deferral of customs duty is estimated to defer A$70m of tax receipts to beyond the forward estimates period.”
We anxiously await confirmation of the commencement date for Streamlined or Monthly Reporting during FY18 and the corresponding costing model to replace the current transactional Import Processing Charges (IPC) for inbound declarations under the foregoing deferred declaration model for accredited Trusted Traders.
In addition, for the Automotive sector, the current level of Customs Duty of 5% for fully built up passenger motor vehicles (i.e. other FTA sourced vehicles), is still being shown in the forward estimates until 2020. Importantly, from a revenue perspective, income of A$630m is projected for FY18, A$690m in FY19 and A$760m for FY20.
Once further analysis is conducted, particularly given the current tight fiscal environment, Customs Duty for these vehicles represents circa 35% of total duty collections, after excise related products are removed (i.e. for FY18 – A$630m out of total estimated collections of A$1.78b). As a corollary, Luxury Car Tax (LCT) is also projected in these estimates of A$570m in FY18, A$600m in FY19 and A$630m in FY20).
We look forward to the Government’s further announcements on the future assistance arrangements for the Automotive sector, particularly given the disappointing closure of Australian manufacturing plants by 1 January 2018.
CEO – Trusted Trader International