Reduce duty on

18/11/2014 14:41

THE Consumer Council wants Government to reduce duty on clothes.

The high duty on new clothes is resulting in high retail prices that many ordinary consumers find difficult to afford. The current taxes on imported garments are 32% fiscal duty and 15% value-added tax (VAT). Fiji’s consumers are paying high prices for clothing which is an essential need.

The high retail prices of garments are also causing a boom in the used or second-hand market.

Used or second-hand garments only incur fiscal duty of $0.96 per kilogram and 15% VAT. However, the prices of used or second-hand clothing are not as low as consumers expect them to be. Many second-hand clothing outlets are selling used-clothes at premium prices. Consumers have raised their concerns with the Council about the high prices of second-hand clothes including other personal items like second-hand shoes.

Retailers of second-hand clothes are profiteering from the very low duty they are incurring and the high retail prices they are charging. As these retailers are bringing these items in bulk and paying duty on weight rather than per unit, they are making profits from selling items per unit on retail. The Council believes that Government is losing out on the revenue that is being generated as these used-clothes are coming in with a very low duty rate; and retailers raking in profits with high retail prices.

The second-hand clothing retail market is largely unregulated. Apart from pricing, there are concerns over the absence of hygiene standards.  Hygiene is a major concern for consumers of second-hand clothes as there is a lack of appropriate regulations to address health and safety issues. There are no disclosures or labelling requirements which will allow consumers to have information on the background of these used-clothing; for example the source country, whether they have been cleaned properly. The risks of skin and other diseases being transmitted via the use of second-hand clothing are high.

Over the years, the prices of second hand clothing have increased and the consumers are unable to even afford second hand clothing. This is due to the inadequacy in the consumer protection legislations which fails to protect the interests of consumers. Hence, consumers have a very limited choice on whether to purchase brand new clothes or second hand clothes.

The Council believes that reducing fiscal duty on new clothes and applying an appropriate rate on imported used-clothes will be of benefit to consumers.