Revised tax package to curb food imports announced in Jamaica
03 September 2012
In June, press reports indicated that in 2011 Jamaica’s food import expenditure rose by over US$100 million to reach US$930 million. This situation was described as ‘unsustainable’ by Agriculture Minister Roger Clarke. Mr Clarke committed the government to redoubling its efforts to increase production and productivity, in part through promoting improved linkages between farmers, agro-processors and hotels.
In June, Mr Clarke responded to ‘harsh criticism’ of the decision to ‘apply additional stamp duties on imported meats, fish, ham and bacon’ rather than ‘taxing animal feed, fresh fruits, vegetables, tubers, fish and meat’ as was initially proposed in early June. The minister argued that the modified tax package ‘will give the agricultural sector an opportunity to grow and develop’, since the government was ‘putting the duty on imported food stuff into this country, so that our farmers benefit instead of fattening farmers from abroad’.
Minister Clarke argued the aim was ‘not just to plant to feed ourselves, but to also export overseas and therefore, we will have to expand our export agriculture’. He stressed the importance of agro-processing ‘so that our farmers can get the maximum out of what we are producing’.
The production of Irish potato, onions, ginger, turmeric, sheep and goat meat, and cocoa and coffee were all highlighted as areas for expansion. Mr Clarke invited the opposition to join the government in working out ‘a strategic plan for the growth and development’ of the agro-food sector
The Inter-American Development Bank’s (IDB’s) country representative, Ancile Brewster, however commented to the press that the government ‘would need to go beyond more than just blocking imports’ if the food import bill was to be reduced. IDB is providing aid to irrigation development (US$15 million) and some US$16 million in assistance to ‘strengthen the value chain by linking farmers to exporters and agro-processors’, with a financial focus on ‘the construction of warehouses, abattoirs and other such infrastructural systems to support the farmers’ efforts’.
The link between the recent government tax package announcement and the emerging dispute with the EC over EPA implementation was noted in the Jamaican press in early July 2012, with government ministers asserting ‘whatever differences we have with Europe, we have always found a way to resolve them’.
Editorial comment
The call of the agriculture minister for the opposition to join the government in working out ‘a strategic plan for the growth and development’ of the agro-food sector can be seen as a positive step, given the restructuring challenges facing the Jamaican agro-food sector. These require a stable long-term policy framework if the necessary investments are to be encouraged. The new approach would also appear to require the building of regional supply chains.
However, the adoption of a strategy of taxing imported foodstuffs as a source of revenue for investing in value-added agri-food products could face challenges, given the recently expressed concerns of the EC over the non-implementation of EPA tariff reduction commitments and EPA requirements for CARIFORUM governments to eliminate duties that have an equivalent effect to import duties (see Agritrade article ‘ Implementation of tariff cuts in Caribbean in the spotlight’, 27 August 2012).
The announcement of increases in stamp duty can be seen as sitting uneasily with commitments in the CARIFORUM–EU EPA on the elimination of ‘para tariffs’, which cover a wide array of taxes, charges and levies that are not described as tariffs by the government imposing them (and so are not included in the tariff reduction or exclusion schedules), but which are levied only on imports and not on domestic output (or are levied at a differential rate).
Para-tariffs are scheduled to be eliminated between 2014 and 2017 (Years 7 to 10 of the implementation schedule). This is potentially an area of considerable tension and dispute, since it is up to individual ACP states to determine whether a particular levy or tax is a para-tariff and hence needs to be removed. It remains to be seen whether any of these national decisions will be contested by the EC, whether any of these cases will go to arbitration, and whether the EC will invoke equivalent sanctions in the case of non-compliance following arbitration.
