From left, Davies, Porter, and Ricketts
Denise Clarke, Staff Reporter
CONSUMERS WILL have to absorb the effects of increased taxation measures to be levied on imported goods, several Customs brokers say.
Of great concern is the four per cent cess on all imports of capital goods and raw material. The cess, according to Finance and Planning Minister, Dr. Omar Davies, is intended to capture tax revenue from the informal sector. But Customs brokers fear that the new tax will drive business away from them, and will also force importers to pass on the increased costs to the consumer.
Customs broker, Ivanhoe Ricketts, said, "What scares me the most is the four per cent cess. After the importers pay the cess what can they pay after that? It's an enormous strain on the importer who will then have to pass it back to the consumer."
President of the Customs Brokers Association of Jamaica, Hendricks Porter, said the four per cent cess could cause a serious cash flow problem for importers, and could mean a reduction in business for Customs brokers. Mr. Ricketts supported this view, arguing that Custom brokers will now be more reluctant to clear goods in advance of payment on behalf of already burdened importers.
"It's not good for business," said Mr. Porter in an interview with The Sunday Gleaner on Friday. "I think the more tax that you put on importers there is less guarantee as a Customs broker that you will see that volume of business. I honestly believe that the importers will have a cash flow problem..."
According to Mr. Ricketts, "...We put up a lot of advances for importers and they are already finding it difficult to meet their obligations. Not only do you not have the cash flow but you cannot afford to put up that kind of money and don't know when you are going to get it back. I have serious concerns about it and I don't think it's going to help businesses large or small."
In his contribution to the 2003/2004 Budget Debate in the House of Representatives last week, Opposition Leader Edward Seaga warned that the Jamaica Labour Party would be contesting some of the new tax measures, including the four per cent cess. Mr. Seaga argued that the cess could translate into as much as 10 per cent for the consumer, when importers add their mark up to the prices.
CREDIT AGAINST INCOME TAX
In announcing the cess, Dr. Davies said it will be treated as a credit against income tax, when importers file their income tax returns.
Exemption from this cess will apply to goods being imported by Government, diplomats, international organisations and individual passengers up to the allowance of US$500.
However, it is still not clear whether the thousands of Jamaicans who receive barrels regularly from their relatives and friends abroad will have to pay this cess. Commissioner of Customs, Allison Moore, was unavailable for comment when The Sunday Gleaner tried to reach her last week. The public relations officer at the Customs Department, Velma Ricketts, could not shed any light on the issue.
"I am unable to give any information at this time. I am still awaiting the Ministry document on it," Ms. Ricketts said.
However, in an analysis of the Budget presentation, the accountancy firm Pricewaterhouse- Coopers (PwC) suggests that revenue from the four per cent cess will come mainly from taxpayers who are already in the tax system, and individuals who import personal and household items. Many Jamaicans depend on their relatives and friends overseas to send food and personal items to assist with the cost of living.
TAXED AT THE PORTS
Mr. Ricketts is also of the view that the new taxation measures outlined imply that these individuals will also be taxed at the ports. He also questioned whether these individuals will be able to reclaim the cess from the Government as a credit against income tax payments.
"Based on the Ministry Paper... it would seem to me that the barrel will also attract the four per cent. So that means that the little lady who goes to clear her barrel must also condition herself to pay the cess in addition to Customs charges. I think it is going to be very difficult particularly for those barrel people who rely on these things," he said.
Mr. Porter agreed. "That poor man who gets a barrel with his food and clothes and who depends on it, I'm sure he would not have bargained for this four per cent. I think it's going to be harder for him and the people who bring in goods for commercial purposes, it's going to be hard for them. It just goes to show that the good always has to suffer for the bad."
Montego Bay-based Customs broker, Joel Hylton, opted to reserve his comment, saying he preferred to wait on official documentation from the Ministry outlining the terms of the cess.
