Businessman disturbed by abrupt change in procedure

A local businessman is disturbed by the manner in which he was treated recently, when he was prevented from clearing through customs, without the payment of Value Added Tax (VAT), two outboard engines he had imported, as had been his practice for years.{{more}}

Keith Howard, who has been a local agent for outboard motors through his businesses, Howard Marine and KP Marine, for the past 31 years, told SEARCHLIGHT on Wednesday, that on April 22, when his customs broker attempted to clear the two engines, one 40 hp and the other 30 hp, she was informed that no concessions would be granted.

Outboard engines of up to 75 hp are VAT exempt once they are to be used exclusively in the fishing industry, and engines of 55 hp or less, to be used by fishermen, are also exempt of import duties.

“They just said the concession is not for KP Marine, it is for the fisherman. I had two engines in the warehouse. I said, how am I going to get these engines out?” he related.

Howard said a customs official told him he would need to produce an invoice to the fisherman that he intends to sell the engine to, and the fisherman would have to apply for the concession. Once that is approved, he would be able to clear the engine VAT free.

“I said to them, ‘these engines are for sale, I did not bring them for a special fisherman. But tomorrow morning, any fisherman who walks in can buy it’,” he said.

The businessman said, to his surprise, he was told if the engine is not for a special fisherman, he would have to clear it, and pay the VAT or open a bonded warehouse.

“I said but to open a bonded warehouse will take a lot of time. You have to apply to the customs, you have to secure the bond at a bank,… so my engines would be in the warehouse attracting warehouse [rent] until somebody comes and buy the engines.”

“Previously I was selling the engines to anybody and it was exempt from VAT. This is what the customs is saying now that it is for fishermen, but before it was just exempt.

“All I had to pay was the 4% customs service charge.

“I was getting it out all the time, I was clearing the engines, selling the engines and obviously it was selling VAT free, I could not give anyone a VAT bill for that,” he said.

Howard explained that small outboard engines such as the 40 hp and 30 hp engines he had imported are rarely used by anyone other than fishermen, and more than likely, they would have been the ones to purchase them.

“The thing is, I think there was an element of trust… face it, only fishermen buy [engines of] 75 hp and below. You hardly find, the only other people that we sell who would normally buy engines that small, is the guys who do water taxi and they are in the tourism business. Other than that, the general person who uses a boat in St Vincent would need a bigger engine; the Bequia channel requires a bigger engine. The fishermen are trained to use that type of boat, the pirogue, and they use the 75 hp, the 40, the 30, the 15, depending on the size of the boat they have,” he explained.

Howard said he had once operated a bonded warehouse, but closed it a few years ago.

“Well you see, I told the customs I had a bonded warehouse before. I closed it, as I didn’t need it as we were getting all the engines out. I used to put all the engines that are over 75 hp in the bond. If anyone buys an engine from me from overseas, I used to sell from the bond as it is going out the country.”

He however said since he was doing most of his business in St Lucia, he closed the warehouse here and opened one there.

Howard said operating a bonded warehouse is an added expense which will impact on the price at which he would be able to sell engines to fishermen.

“Every time the customs comes when I want to take an engine out of the bond, it would cost an extra charge. Although it is VAT free, it is still an extra cost and the process is held up as one has to make an appointment with the customs. The customer would have to go through the application process himself,” the businessman said.

Howard told SEARCHLIGHT that he is now unsure how he will proceed as since he was informed of the change in procedure two and a half weeks ago, he has been unable to speak with Comptroller of Customs Grenville John.

He said when he tried to meet with John, he was told that the Comptroller did not want to see him to discuss anything, because a decision had already been made.

“If you going to change it, well call me and tell me you have to do it this way, it is different, but just one day, no notice, change,” Howard said, adding that he was disturbed by the manner in which he was treated.

SEARCHLIGHT attempted to contact John on Wednesday, but we were told he was out of the office. We were however directed to Deputy Comptroller (Administration) Samuel Thomas, who declined to discuss Howard’s specific case, but provided us with the legal basis and process for the importation of outboard engines for the fishing industry. (See related story).

It has been reported that Opposition Arnhim Eustace has described as “unacceptable” government’s refusal to continue to allow VAT free and duty free concessions to Howard, which has resulted in an increase in prices of engines sold to fishermen.

According to the report, published in a local newspaper last week, Eustace questioned whether the refusal of concessions and a search of Howard’s property by police on April 23, had any connection to the fact that Keith Howard is the brother of Doug Howard, who resides in New York, and recently campaigned against Prime Minister Dr Ralph Gonsalves’ selection as a speaker for a conference on Reparations in the United States.