Customs, Capital Controls and Airway Robbery

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We learned a valuable lesson from Mr Trebel once. Aside from teaching us art at high school, which yielded nothing valuable, Mr Trebel also supervised after school squash. He enjoyed thrashing the young delinquents who made his 9 to 3 job miserable. Based on that, your editor had a large target painted on our back. As you’re about to find out, literally so.

We took on the challenge of playing against Mr Trebel before being terribly familiar with the rules of squash. The game ended with a very large red welt on our back, courtesy of Mr Trebel’s forehand. For those of you who have never had the pleasure, squash is the only game in the world where intentionally hitting the ball into your opponent gets you a point. At least, that was Mr Trebel’s interpretation. And he gleefully pointed it out too.

The lesson is never to turn your back on the person making the rules. In fact, don’t stand in front of them. Unfortunately, this week, we did both. And got what we deserved. This is the short version of our story:

The Australian government has decided to make it illegal to travel into Australia with anything valued above $1000. The penalty for breaching this new law by coming home with expensive souvenirs is a few hours of hard labour or a minimum fine of $150 (and fewer hours of hard labour). It’s your choice, though.

Unless, of course, you don’t tell customs about the value of your ‘imports’ and don’t get checked. Unfortunately, your editor was an honest person…until recently.

So here’s the official interpretation of the law: anyone travelling into Australia with goods valued above $1000 must complete an Import Declaration form. That, according to customs officers and their notice to ‘importers’, is too difficult for you to do yourself. Customs can’t even help you with it because the laws for filling out an Import Declaration form are too complicated for them to understand (they feature at least three pieces of legislation). Believe it or not, customs ‘outsources’ having to deal with these forms once submitted.

Anyway, you too need to ‘outsource’ filling out the form, because it’s so complicated. You need to hire someone called a ‘customs broker’ to figure it all out. The cheapest we could find costs $150. Most don’t want to know you unless you’re a business.

Your editor decided to have a go at this so called Import Dec form himself — it’s only 3 pages long.

But the ‘Documentary Import Declaration Comprehensive Guide’ is 62 pages long. It features useful information for filling out an Import Dec, like the GST exemption code for penile clamps, artificial ears and eyes, and toilet frames. It also provides the United Nations Locode for Johannesburg, South Africa and Groote Eylandt, Australia. And, last but certainly not least, the fact that ‘ITEM 23B [of the] Customs Tariff Act’ exempts ‘Goods donated or bequeathed to the public or a public institution’ from GST.

Surprise.

You have to wonder whether bequeathing a penile clamp to the Department of Climate Change from overseas is subject to GST. Do two exemptions make a positive?

In order to submit an Import Dec, you must have an Integrated Cargo System number. Which means you have to register as an importer with customs. That’s a one page document. But you must provide all sorts of ID and do it in person at a selection of inconvenient locations. Then you get your ICS number. Then you can go and submit your Import Dec, also in person at a selection of inconvenient locations (you can’t submit the ICS and Import Dec at the same time, as one requires the number you get from the other).

Then your belongings will get released, if you filled out the form correctly. Although Customs claims the form is too complicated for them, so it probably doesn’t matter what you put in, as long as it’s in the 62 page guide somewhere. Of course, you have to go and collect your belongings yourself once the Import Dec is approved, making it three trips to a selection of inconvenient locations.

But why do goods need an Import Dec in the first place? Well, our ‘Receipt for Goods’ form states the reason as ‘Pending payment of duty/tax.’ The problem is that the items we brought back are not subject to either. But they still need the Import Dec form, says customs. The customs provided guide to importing the specific items says so: ‘Most imported goods with a value of more than $A1,000 must be declared on an import declaration.’ There you have it, then.

So, we’re back to filling out the Import Dec. Using its 62 page guide and the largest piece of legislation in the world (Australian tax legislation) for assistance. All this because we might have to pay tax, despite not actually having to pay any tax.

Wait, what’s this? The import guide provided to travellers at the airport by customs officers which explains the need for an Import Dec has a second page… a page that is not provided to travellers at the airport by customs officers. A page that provides a single exemption. An exemption which applies to just about any traveller:

Import declarations are not required if imported goods are the accompanied personal effects of arriving passengers or crew unless the goods are commercial goods.

Imagine if your editor had only provided half the information we were required to give to customs, exempting the specific part that was relevant. We’d be off to jail, probably after being physically violated in various places. A fine would follow.

Your editor was so furious at the discovery of this second page and the exemption on it, having spent two days completing an Import Dec and ICS registration form, that we forgot to eat our breakfast and turned up to the office an hour early for no apparent reason.

By the way, if you’re wondering what commercial goods are, two customs officers have been unable to give us a definition and we can’t find one anywhere.

Anyway, as you read this, we’ll be off to the airport to get our belongings. There will be a great show made of checking their condition for the slightest bit of damage. We’ll keep you updated on what the complaints department comes up with on the negligently or deliberately misleading behaviour of their customs officers. So far, they’ve asked us to provide the documents they already have and a physical description of the customs officers involved (despite us already providing their names).

Here are some things to keep in mind when dealing with government officials:

  1. They know what they are doing. Which is making themselves look good, not providing a service to you or Australia. They know how to bait and trap you into becoming a problem so they can spend their time dealing with it. Which makes them look good.
  2. They enjoy the chase, because they have nothing else to do.
  3. It is not about the law. They don’t know it. If you do, you will most likely beat them, but that is very time consuming, which is what they bank on.
  4. Governments don’t ban things, they make them difficult and expensive, making them so cumbersome that people stop doing them. Only criminals and people willing to ignore the law for no malicious reason continue doing the activity. Which is how government officials know you are doing something wrong when you do the activity.

Here are some principles for dealing with this sort of infuriating nonsense:

  1. Obfuscate, plead ignorance and shut up. This prevents the bait and trap tactics of officials. For example, if a customs officer asks ‘what are you going to do with these items’, answer ‘own them’.
  2. Just as finding rule breakers reflects well on officials, no matter how stupid the law, complaints reflect badly on them. Threatening a complaint is pretty much the only power you have.
  3. Make them look bad in front of other people, but not their colleagues. Officials stick together.

Over in the US, all this is even more severe. Customs and Border Patrol is authorised to operate within a reasonable distance of the border. Apparently that’s 100 miles. Because customs are not subject to the usual constraints put on police and other officials, the American Civil Liberties Union has pointed out that two thirds of Americans live within this ‘constitution-free zone’.

The Australian $1000 import law we wrote about and experienced came into effect on the 1st July this year, according to customs officials (their excuse for the whole debacle is that they are unfamiliar with the rules). Do not make the mistake of thinking these types of capital controls aren’t coming to Australia. They are going to slam into your personal life right here at home.

Until next week,

Nickolai Hubble.
The Daily Reckoning Weekend Edition

ALSO THIS WEEK in The Daily Reckoning Australia…

China’s GDP Figures… Lies… Damned Lies?
By Dan Denning

Compiling GDP figures for the world’s second largest economy is either a fearsome feat of command-economy-efficiency, or a highly suspect sign that the statistics may be more ‘aspirational’ than ‘informational’. Come to think of it, ‘aspirational’ is probably the right word. As Greg points out in China’s Bust , full employment is the political imperative that trumps profits in China. Growth is the necessary by-product of a political goal. This leads to troubling investment decisions.

Flexible Investing to Become a Relaxed Investor
By Murray Dawes

Trading a market such as this one is incredibly tricky. There has been no real trend to speak of in Australian stocks for the past few years and the usual process of macroeconomic analysis for big picture investment decisions has been hijacked by the central planners and algorithmic traders around the world, who have turned the markets into a casino. What is an investor who is forced to invest 9% of his salary into super supposed to do in such an environment?

How Can Anyone Possibly Take Ben Bernanke Seriously?
By Dan Denning

Today’s Daily Reckoning will have to digest the drivel and bunkum dished out by US Federal Reserve Chairman Ben Bernanke. The Fed head spoke in front of the Senate Banking Committee in Washington DC. Mesmerised zombies everywhere hung on his every word for clues about when the next round of free money will be injected into the rotting corpse of the financial markets. Aussie share markets will react to this.

How the US Feds Feed the Rich
By Bill Bonner

The Daily Reckoning…proved right again! We’ve been sticking our neck out. We had a strong hunch that the rich had gotten a whole lot richer not because they were suddenly greedier or suddenly smarter, but because of the feds. The feds were handing out money. The rich were first in line.

But we didn’t have any real proof…until now.

Nick Hubble
Nick Hubble is a feature editor of The Daily Reckoning and editor of The Money for Life Letter. Having gained degrees in Finance, Economics and Law from the prestigious Bond University, Nick completed an internship at probably the most famous investment bank in the world, where he discovered what the financial world was really like. He then brought his youthful enthusiasm and energy to Port Phillip Publishing, where, instead of telling everyone about The Daily Reckoning, he started writing for it. To follow Nick's financial world view more closely you can you can subscribe to The Daily Reckoning for free here. If you’re already a Daily Reckoning subscriber, then we recommend you also join him on Google+. It's where he shares investment research, commentary and ideas that he can't always fit into his regular Daily Reckoning emails.
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2 Comments on "Customs, Capital Controls and Airway Robbery"

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kosio
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Oh, my! I never thought that growing up in a (wanna be) communist country will prove to be such a benefit after all!
This is the exact perception of life and experience you get so painfully familiar with. Learning to deal with it at an early age is, no doubt, a huge benefit.
Sad to see it in the “free” world though.

Ross
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If you want to understand macro economic and politics you must understand physical trade. It is only in a neo-liberal/neo-con debt instrument fueled services economy world that you can ignore it. Unfortunately academic economics teaches students virtually nothing about mercantile trade. If Nikolai were to think his experience was complex you aught not to review the history of trade rules with their Brussels and MTN valuation nomenclatures. The pre-supposed among western liberal elites is that duty free trade and globalisation will extinguish the commercial aspect of customs border controls that have existed for millenia. In Sydney the rum rebellion era… Read more »
wpDiscuz
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