THE MINISTRY of Finance and Planning's decision to give the Duty Free sector a major tax break not only smacks of hypocrisy but gives the impression of a double standard, other business interests have charged.
Their contention is that while other sectors have had to live with the taxes imposed by Finance Minister Dr. Omar Davies, the Duty Free merchants have seen theirs cut by nearly 50 per cent.
"This is simply amazing stuff," said an irate Richard Stephenson, a Montego Bay businessman. "Senior citizens haven't had much of a break, pharmaceutical items continue to be taxed why the special treatment for the inbond sector?"
Dr. Davies, during the April budget exercise, had announced a 9 per cent increase from 6 per cent to 15 per cent on items classified as duty free. The news was immediately greeted with anger by the inbond sector, with merchants declaring that the tax increase would impede their ability to compete with other islands. A meeting was then sought with the Finance Ministry where a delegation was sent to argue their case. After a series of meetings, the merchants several weeks ago were then given a reprieve their taxes reduced to 8 per cent, representing only a 2 per cent increase.
It also represented an about face on the part of the Minister who when imposing the Stamp Duty had noted that "Tax revenues from in-bond merchants have been minuscule. No indirect tax, apart from a 6 per cent additional stamp duty is levied on goods imported for the trade... it has been that way for a while. It is proposed to increase the additional stamp duty from six per cent to 15 per cent on goods imported for the trade.
"This measure is expected to yield $84 million and the effective date will be May 1, 2003." The Minister could not be reached last night for a comment.
"The question which somebody needs to answer is who really benefits from the inbond trade... is it the country or is it the inbond merchants?" asked Paulette Chambers, Ocho Rios businesswoman. "Everybody else is being burdened with taxes yet these guys are given a major tax break. Where is the justice in all of this?"
The inbond merchants, however, feel the criticisms are unfair. "It is simply a matter of would we be able to compete or not," explained one senior member of the trade who requested anonymity last night. "If the Minister hadn't budged there would be no way we could compete with the other islands. Do you have any idea how many people would be out of a job if we had been forced to close our doors? It is one thing to criticise but it's also important to have the facts."
But for Michelle Rodney, a Montego Bay businesswoman, a complete investigation of the Duty Free sector needs to be done before any form of concession is given. "For me, the question is...I would like to know why no official announcement was made about this tax reduction," she said. "If it weren't for their boasting nobody would have known about this reduction. Let's not forget that the Revenue Protection Department (RPD) has in the past charged merchants for selling to locals a major violation of their Duty Free licences. When was the last time an investigation was done to ensure that everybody is operating above board? In both Montego Bay and Ocho Rios there are merchants selling souvenir items in the same establishment where they are selling Duty Free items another violation."
The RPD, several years ago, following weeks of investigation, charged a number of inbond merchants with selling Duty Free items to locals. In an earlier interview, RPD head Mike Surridge acknowledged that there were aspects of the Duty Free Trade that required looking into.
Kumar Sujanani, a merchant from Ocho Rios, vehemently denies that merchants are violating their licences by selling souvenir items alongside Duty Free items. In a letter to the Editor last week he said: "Moreover, In-Bond Stores are required by law to maintain prescribed 'Inbond Ledgers' that record goods sold. T-shirts, even those imported, is not one of the prescribed items. The Ledgers are monitored and periodically inspected by Custom Officers at random to ensure compliance. Indeed, I know of no recent case where a licensed In-Bond merchant has been found to be in breach of the customs or commercial infraction of any kind, including the violation of the Copyright and Trademark Act."
