GOVERNMENT HAS agreed to allow manufacturers to defer payment of General Consumption Tax (GCT) on packaging material imported into the island, instead of the pre-payment policy announced by Finance and Planning Minister, Dr. Omar Davies, in April and subsequently implemented.
The new measure should not result in a loss of revenue to the Government, but means that manufacturers will not have to pay the money upfront at the ports of entry, according to a tax administration official.
The change in policy was disclosed by Doreen Frankson, president of the Jamaica Manufacturers Association (JMA), during the annual general meeting of the business lobby group at its Duke Street, downtown Kingston office yesterday, at which she was elected unopposed.
At yesterday's meeting, Raymond Miles, Jnr., the chief executive of Sun Island Jamaica, was elected deputy president of the JMA, while Albert Ramsay, managing director of Serge Island Estates was elected treasurer. Four directors were also re-elected and seven others elected.
Mrs. Frankson was appointed interim president of the JMA in May, after Clarence Clarke resigned in the face of criticisms over the private sector's acceptance of Government's two per cent Customs user fee in place of a four per cent cess on imports.
JMA members had also rejected the imposition of a pre-payment of GCT on packaging material, and mandated Mrs. Frankson to lead a committee to lobby the Government to re-open the negotiations. The committee subsequently met with a team from the Ministry of Finance and obtained a commitment that the pre-payment policy would be removed. Mrs. Frankson said the JMA has proposed the new policy be implemented on July 1, but they were still in discussions with the Tax Administration Department with a view to arriving at an effective date.
When contacted, Winston Lawson, a specialist in the Tax Administration Department, confirmed that a letter was sent to the JMA president signalling the Government's intention to allow a deferral of the GCT on packaging material imported into the island, but he said it would not result in a loss of revenue as it would be collected at another point.
The JMA had argued that the tax on packaging would affect their cash flow because, in most cases, they have to obtain financing at high interest rates to cover the additional cost.
Mrs. Frankson also said the JMA was still in discussions with the Ministry regarding the two per cent Customs user fee, as well as a facility whereby manufacturers supplying certain goods would be allowed to claim GCT refunds. During his budget presentation in April, the Finance Minister, as part of the measures to widen the GCT base, had also announced the removal of the refund facility.
The JMA has also been lobbying for the removal of the environmental levy, which was placed on plastic containers imported, manufactured and distributed in Jamaica.
However, Francois Chalifour, managing director of the Jamaica Drink Company, manufacturers of Bigga Soft Drinks, said the Government has decided the levy was a given and were only now seeking private sector input as to how they could collect the $190 million anticipated by the budget. In addition, he said, the $2 per kilogram on polyethylene containers announced by the Finance Minister would not be enough to raise the money and, therefore, the Government was also seeking to expand the scope of the levy to include other plastic packaging material used in manufacturing.
