FinMin seeks record take for customs user fee after secret settlement
Published:Friday | May 6, 2011 | 12:00 AM
A constitutional challenge to the customs user fee (CUF) that was settled by the parties last month has not killed the tax, as some businesses hoped.
Instead, the Ministry of Finance is looking to make its largest haul yet from the CUF, according to revenue data published alongside the Budget.
Last year, the fee brought in an estimated J$6.74 billion within the period ending March 2011, which, though a billion dollars shy of the targeted intake, was still close to half-billion more than the J$6.28 billion of inflows the year before.
Within this fiscal year, the finance ministry has projected increased collections of J$8.53 billion for year-on-year increase of 27 per cent.
Last year, Joey Issa's Cool Petroleum sued Government over what it argued was an overreach of the finance minister's powers to impose the customs user fee without parliamentary approval, citing Section 257 of the Constitution, and sought to reclaim J$1.4 billion the gas marketing company said was paid over to the Customs Department since 2005.
The Government challenged the size of the payments as part of its defence filed in the Supreme Court, but the case was eventually settled out of court in April, under a secret agreement between Issa and the state.
The CUF was first introduced as a two per cent tax in 2003, and now represents 88 per cent of all non-tax revenue collected by Customs.
It is applied to the cost-insurance-freight value of all imports, except for material used in manufacturing under Section 807 of the US tax code, which are designated for re-export,
Had the Supreme Court ruled the fee unconstitutional, it could have exposed the Government to refund claims amounting to billions.
CUF collections in the past five years have amounted to more than J$32 billion, according to the Financial Gleaner's assessment of finance ministry data, or just under J$6.5 billion per annum.