Border Tariff Goes Ahead

The Iraqi Governing Council, IGC, will shortly implement a long-delayed decree authorising the collection of tariffs at border crossings.

April 1 is the new date selected for the implementation of Order Number 38, which was passed by the Governing Council, GC, and the Coalition Provisional Authority, CPA, last September with an original starting date of January 1.

The new law – referred to as the Reconstruction Levy – imposes a five per cent rate of duty on most goods, the aim being that the revenue should help with the reconstruction of Iraq.

The CPA ordered the delay to allow time to set up structures to collect the levy properly, Deputy Interior Minister Ahmed Kadhim told IWPR.

Under the old regime, trucks passed through border checkpoints but were not inspected and taxed until they arrived at their destination.

The location for inspection was changed from the cities to the borders in order to better protect the country against the import of weapons, drugs and other contraband, Kadhim said.

The ministries of finance, trade and interior have been working together to prepare for smooth implementation of the new tax regime, Kadhim said.

The delay follows complaints from traders and officials that the tax could not be collected at the borders.

Traders and even customs officials charged with enforcing the law had complained there were no border facilities and the country was not ready to start taxing imports.

A thirteen-point list put together by Iraq's union for customs officials itemises the facilities needed at the border crossing points.

The list includes warehouses to store goods, refrigerators for perishables, and security to protect both goods and the tariffs collected.

The crossing points also lack facilities to house the extra workers needed to run an effective customs regime.

From the merchants' perspective, there are no banks or other facilities to withdraw money.

This means that traders will have to carry large amounts of cash in and out of the country - a dangerous proposition on Iraq's bandit-ridden roads.

"Taxing goods at the border points is illogical," said Nibras Jabbar, executive manager of the al-Badyaa commercial company.

"There are no security, no banks, no lifting equipment, no cold storage - all this will create difficulties."

Even some officials were concerned about the security at the border crossings and open highways.

"That law was drafted hastily, considering the current [security] situation of the country," said General Jasem Hammadi, commander of Iraq's border forces.

But Kadhim said security has improved due to regular police patrols along the highways to protect truckers and merchants.

Some Iraqi businessmen are also concerned because the new law taxes capital goods which formerly were exempt to encourage industrial development.

"We had no taxes previously, so once they apply the new law we will be bankrupt and will close our companies," said Naser Radhi, executive manager of al-Khaleeg Perfume Company.

Salaam Jihad is an IWPR trainee.