Silly how events while traveling are so different. I’ve been waiting for over a month to get a battery for my Apple Macbook. It’s been tied up in customs, as if a battery is something that the Nicaraguan government has to worry about.
The key for government in any country is to allow and help consumers have smooth, easy transactions. Commerce is the cornerstone of any country, and when government interferes with that, their citizens suffer.
Somehow governments got this concept that if they heavily tax goods coming into their countries, they’ll make more tax revenue. This is a false concept. The consumer will always find away to buy products without having to pay the high customs tax.
In the countries that try to tax products heavily, one of the ways around this is to find “mules”. These are people who fly regularly to the USA, buy products that people need in their home country, and bring them back. One person trying to bring personal products through customs is more efficient and cheaper than trying to import products through normal, government channels.
I’ll give you an example. I wanted to buy a zoom lens for my Olympus camera. In Costa Rica the cost is a little over $700. I can buy it in the states for around $300. If I could have found someone who was flying to the states with a round trip ticket, I could have given them an extra $50 to $100. They could have bought the lens, brought it through customs at the airport, and delivered it to me. They would have made 25% of their air fare and I would have the lens at a great discount vs. what I would pay in Costa Rica.
The role of government always be a small role for the consumer to have easy access to goods. Taxing at the place of purchase, a “Fair Tax” is the most logical and best way for the government to increase its tax base.
The problem with this in underdeveloped countries, is that most people who run a store keep track of sales with pen and paper. Most “mom and pop” stores do not have cash registers that tax men can come in and look at receipts to figure the proper taxes that a store owner should pay.
This strikes terror in the government, and leads them to believe that taxing products at a high rate when they arrive in the country is the answer. Governments always want control, and taxes are the first thing enacted to control what citizens are “allowed” to buy.
Yet if you look at a country like Andorra, a tax-free zone, the government functions and receives enough taxes to work.
The citizens are able to buy products without heavy import taxes, and thus it increases the volume of goods sold in stores. Stores employ more people, payroll taxes are greater, and everyone benefits.
Always remember when traveling or even living in your own country – less government is always better – for the citizens.
If you look at a government like China – where the government has its fingers into almost everything – you might say a large government is a good thing. Look a little closer!
People in China do not have free access to all the internet – it’s censored.
Most people in China have not benefited from the economic “boom”. Just like the USA, a small percentage of people are making most of the money. The average Chinese are still poor, still cannot make enough money to afford a roof over their heads and they always risk the danger of the Chinese government arresting them for whatever reason the government drums up.
The government slowed down the delivery of my battery to the store. The government has increased the cost of the battery that I am going to get this morning.
If I was a business person, trying to get a foothold in the Nicaraguan economy, this would be a negative for doing business in Nicaragua.
What Nicaragua needs to do (as with most surrounding countries here in Central America) is smooth out importation of goods, make it easy to do business in the country. This will increase taxes for the government, increase the standard of living for their citizens and make it more inviting to set up a business in Nicaragua.
Honduras, Guatemala, El Salvador and Belize all could learn a lot by studying and following the example of a duty-free country like Andorra.
Off to get my “hung up in customs for weeks” battery, thanks to the Nicaraguan government and their rules for importation.
Cheers for now