Import tax rise would punish consumers
It was perhaps inevitable that Rachel Reeves's visit to Washington would result in the Chancellor developing a taste for the most damaging and protectionist elements of President Donald Trump's economic agenda.
Hopes that Ms Reeves might develop an interest in cutting government waste and spending, or mimicking the pro-growth dynamics of the mooted extension of Trump's 2017 Tax Cuts and Jobs Act were never particularly high, but it appears that Ms Reeves has instead identified a new way to squeeze a little extra blood from the British taxpayer.
The Chancellor appears to be preparing to alter de minimis rules for import duties with the intent of slapping additional taxes on low-cost consumer goods. At present, parcels valued at less than £135 are exempt from duties. Under the guise of preventing the 'dumping' of cheap goods, this exemption appears to be threatened, with Ms Reeves claiming the Government is 'standing up for the British high street against ... cheap imports of products that undercut retailers'.
This is a rhetorical sleight of hand that should fool very few. The move is protectionist and anti-consumer, prioritising revenue and the special pleading of a few stores over the British public being able to enjoy the benefits of free trade. The removal of the threshold may well result in shoppers encountering unexpected charges or delays, and higher administrative charges to boot.
To plead the necessity of defending the high street as rationale, moreover, rings somewhat hollow given the repeated blows dealt to retail stores by this Government over the past year. From hikes to the minimum wage and rises to Employer National Insurance Contributions to the proposed introduction of higher business rates, Ms Reeves and her colleagues have gone out of their way to make it harder for businesses to serve communities profitably.
Having raised the costs of domestic retail, they now appear to want to even the playing field by raising the costs of imported goods, which, by virtue of being produced overseas and bypassing the high street, manage to avoid most of this self-inflicted damage. In the process, the Government may risk the mooted £50 billion floating of fast-fashion brand Shein in London.
Thriving high streets are a community asset of great value that should be cherished. The key to resurrecting them, however, is lowering the burden of the state, not once more raising taxes.
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