Handling of tax measures irks PSOJ

THE PRIVATE Sector Organisation of Jamaica (PSOJ) has expressed concern at the handling of recent tax measures announced by Finance and Public Service Minister Audley Shaw.

"We have noted with grave concern the manner in which recent changes in the basis of application of SCT to alcoholic beverages has been handled," the PSOJ said in a release on Friday.

"Without making any comment on the principle of taxing such beverages on the basis of applying tax at specific rates on alcohol content by volume (ABV), which does appear from the international literature to be the commonly accepted basis for application of excise-type taxes on alcoholic beverages, we would wish to make some general observations from a tax policy and implementation perspective."

The PSOJ stated in its Economic Policy Framework document, which was published earlier this year, that "the current tax regime has evolved on a piecemeal basis and in some instances in response to short-term needs or sector interests".

Historical pattern

Continuing, the PSOJ said: "The recently implemented, and sudden, change to the ABV method of application of SCT to alcoholic beverages appears to follow the historical pattern of piecemeal adjustment in response to short-term needs, and stands in stark contrast to the Government's stated commitment to a comprehensive approach to tax reform."

In relation to the budget process, the private-sector body said it had called for reforms that would "demonstrate the link between budget measures and the Govern-ment's medium- and long-term planning objectives."

According to the PSOJ, "We have also called on the Government to consult with the private sector and other stakeholders through the various stages of the budget process.

"We are, therefore, surprised that the Government should have proceeded to implement changes in this instance with an almost total lack of consultation among industry participants or their representative associations, and without any meaningful attempt to link the measures in question to their medium-term objectives," the PSOJ said.

The PSOJ contended that the pursuit of comprehensive tax reform was one of four central pillars of its Economic Policy Framework, "and is one that takes on central importance given the fiscal consolidation programme currently under way".

"While we understand the importance of generating sufficient revenues, and are strong advocates of fiscal responsibility in general, we submit that the approach exemplified by these most recent ad hoc and piecemeal measures is neither consistent with the tenets of good tax policy, nor would it suggest that the Government places any significant value on con-sultation with its partners."

Late last week, Finance Minister Audley Shaw's about-turn on alcohol tax measures angered local beer producer Red Stripe, as well as Wisynco, a major player in the local energy-drink market.

Red Stripe said that it would have to relocate its export business from Jamaica within the next six months if the Government refused to roll back the amended tax measures announced last Tuesday.

Last Tuesday, Shaw moved the tax on beer and stout to $1,134 per litre of pure alcohol, reverting from the $960 duty he imposed earlier in the month.

The increase brings the tax on beer and stout in line with the cess on spirits such as those produced by Wray and Nephew.